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Int. J. Financial Stud. 2015, 3(1), 3-30; doi:10.3390/ijfs3010003

The Relation between Past Flows and Future Performance: Simple Investment Strategies in the Mutual Fund Sector

Faculty of Business and Economics, University of Augsburg, Universitaetsstrasse 16, 86159 Augsburg, Germany
Academic Editor: Nicholas Apergis
Received: 4 November 2014 / Revised: 7 January 2015 / Accepted: 29 January 2015 / Published: 4 February 2015
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In the mutual fund literature, it is an established fact that investors “chase past performance”. However, the opposite impact of flows on performance is widely discussed. Mainly, liquidity costs are held responsible for short-term erosion of performance, while high inflows enhance performance over longer horizons. I investigate this relation for various groups of equity, bond, and money market funds and find significant outperformance in high inflow funds over several months, especially for specific bond fund groups. In addition, I test whether this information can be exploited using simple investment strategies but find that the abnormal returns are too low to offset associated costs. View Full-Text
Keywords: mutual fund performance; fund flows; trading strategies mutual fund performance; fund flows; trading strategies
This is an open access article distributed under the Creative Commons Attribution License which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited. (CC BY 4.0).

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Rohleder, M. The Relation between Past Flows and Future Performance: Simple Investment Strategies in the Mutual Fund Sector. Int. J. Financial Stud. 2015, 3, 3-30.

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Int. J. Financial Stud. EISSN 2227-7072 Published by MDPI AG, Basel, Switzerland RSS E-Mail Table of Contents Alert
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