The Determinants of Investment Flows: Retail versus Institutional Mutual Funds

49 Pages Posted: 30 Jul 2012 Last revised: 6 May 2016

Multiple version iconThere are 2 versions of this paper

Date Written: June 29, 2013

Abstract

This paper compares the fund selection criteria used by investors in retail mutual funds with the criteria of investors in institutional mutual funds. I find that, compared with investors of retail mutual funds, clients of institutional mutual funds use more quantitatively sophisticated criteria such as risk-adjusted return measures and tracking error, demonstrate stronger momentum-driven and herding behaviors, and are less sensitive to fund expense ratio. In addition, I provide evidence that the previously-documented convex form of the flow-performance relationship is driven mostly by retail funds.

Keywords: mutual funds, institutional investors, retail investors, institutional funds, retail funds, investment decisions, fund flows, performance evaluation

JEL Classification: G02, G11, G23

Suggested Citation

Salganik-Shoshan, Galla, The Determinants of Investment Flows: Retail versus Institutional Mutual Funds (June 29, 2013). Available at SSRN: https://ssrn.com/abstract=2119598 or http://dx.doi.org/10.2139/ssrn.2119598

Galla Salganik-Shoshan (Contact Author)

Ben-Gurion University of the Negev ( email )

Beer Sheva
Israel

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