Mutual Funds: An Influential Review of Studies in Performance, Persistence, Investment Styles, Managerial Skills, Fund Characteristics and Behavioral Patterns

245 Pages Posted: 7 Oct 2009

See all articles by Melih Alp

Melih Alp

University of St Andrews - School of Management

Date Written: October 5, 2009


This study seeks to review the most recent studies in the field of mutual funds (2005-2009). Virtually all articles reviewed by this paper belong to top journals and top institutions. Moreover, this study also attempts to evaluate some other articles published prior to 2005 and defined as legendary (i.e. Fama and French, 1993). As the mutual fund industry has developed rapidly over the past 20 years, there has concomitantly evolved a rich plausible academic literature consisting of numerous topics. One of the most frequently addressed topics in the current literature is that of mutual fund performance. While earlier studies lay emphasis on the straightforward performance measures and benchmarking, this focus on performance dimension seems to have changed from performance-based studies to style-based studies which also present information regarding persistence in fund performance, fund characteristics, behavioural patterns, stock-picking and timing abilities of managers. Following this shift of emphasis, the methods applied and the data employed by other papers have changed too. This study therefore aims to build on the current literature by assessing all these relevant studies. It further complements the literature by evaluating studies in terms of five distinct dimensions, namely “Questions Addressed by Author(s), Method(s) Adopted, Data Employed, Key Findings, and Contribution to the extant literature and Critique”. Consequently, this study satisfies the need to synthesize the key contributions that have recently been made on the history of mutual funds by other papers. Having investigated the recently evolving body of the literature on the respective topics, the common findings are as follows; a) small-cap funds generally outperform large-cap funds and large-cap funds possess more style consistency than do the mid/small-cap funds. Growth funds play a dominant role in the late 1990s, whereas value funds are very common before and after this period. b) There are no clear persistent patterns found and even if there are, it is generally due to luck rather than skill. c) Actively managed funds generally underperform passive strategies and there is very little evidence of fund managers with timing/picking abilities. d) Low expense ratios are related to superior performance and fund flows are found to be positively related to advertising and distribution fees. Female managers participate in excessive trading and are more risk-averse compared to their male counterparts.

Keywords: Mutual Fund Performance, Persistent Return Patterns, Investment Styles, Managerial Skills, Mutual Fund Characteristics, Behavioural Patterns

JEL Classification: C1, C2, C3, C90, D21, D23, G1, G2, G3, N20, O16

Suggested Citation

Alp, Melih, Mutual Funds: An Influential Review of Studies in Performance, Persistence, Investment Styles, Managerial Skills, Fund Characteristics and Behavioral Patterns (October 5, 2009). Available at SSRN: or

Melih Alp (Contact Author)

University of St Andrews - School of Management ( email )

The Gateway
The Gateway, North Haugh
St Andrews, Fife KY16 9SS
United Kingdom


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