48 Pages Posted: 15 Dec 1999
Date Written: July 1999
We provide an exploratory investigation of mutual funds' investment styles. Funds' styles tend to cluster around a broad market benchmark. When funds deviate from the benchmark they are more likely to favor growth stocks with good past performance. There is some consistency in styles, although funds with poor past performance are more likely to change styles. Some evidence suggests that growth funds have better style-adjusted performance than value funds. The results are not sensitive to style identification procedure, but an approach based on fund portfolio characteristics performs better in predicting future fund returns.
Suggested Citation: Suggested Citation
Chan, Louis K.C. and Chen, Hsiu-Lang and Lakonishok, Josef, On Mutual Fund Investment Styles (July 1999). NBER Working Paper No. w7215. Available at SSRN: https://ssrn.com/abstract=171070