Are the Structural Changes in Mutual Funds Investing Driving the U.S. Stock Market to its Current Levels?
Posted: 14 Feb 1999
Abstract
We examine the long-run equilibrium relation between the net flow of funds into equity mutual funds and the S&P 500 index. Applying the Engle and Granger error correction methodology followed by a state space procedure, we find that the levels of the stock market are influenced by the net flow of funds into equity mutual funds. Our findings indicate that the U.S. equity market appears to be rationally adjusting to a structural change in the behavior of the U.S. investing public.
JEL Classification: G12, G14
Suggested Citation: Suggested Citation
Najand, Mohammad and Mosebach, Michael, Are the Structural Changes in Mutual Funds Investing Driving the U.S. Stock Market to its Current Levels?. Available at SSRN: https://ssrn.com/abstract=148372
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