Broken promises, competition, and capital allocation in the mutual fund industry

• 成果类型: Article
• 署名作者: Abis, Simona; Lines, Anton
• 署名单位: University of Colorado System; University of Colorado Boulder; Copenhagen Business School
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2024.103948
• 发表日期: 2024
• 关键词: Mutual fund strategies; Prospectuses; Industrial Organization; Fund flows; Machine Learning

摘要

What characteristics of mutual funds do investors care about? In addition to performance and fees, we show that investors exhibit a clear preference for managers who adhere to the strategies they describe in their prospectuses. Capital flows respond negatively when funds diverge from the average holdings of their text- based strategy peer groups, but positively when they outperform those peer averages. We identify this effect using a novel instrumental variables approach, and show that funds face a delicate trade-off between keeping their promises and outperforming their peers who make similar promises.