Spillover Effects in Mutual Fund Companies
35 Pages Posted: 18 Jan 2011 Last revised: 27 Feb 2015
Date Written: February 17, 2015
Our paper investigates spillover effects across different business segments of publicly traded financial conglomerates. We find that the investment decisions of mutual fund shareholders do not just depend on the prior performance of the mutual funds, they also depend on the prior performance of the funds’ management companies. Flows into equity and bond mutual funds increase with the prior stock price performance of the funds’ management companies after controlling for fund performance and other fund characteristics. The sensitivity of flows to the management company’s performance is not justified by the subsequent performance of the affiliated funds. The results indicate that the reputation of a company’s brand has a significant impact on the behavior of its customers.
Keywords: Mutual Fund Flows, Financial Conglomerates, Umbrella Branding, Performance Predictability
JEL Classification: G10, G14, G21, G23, G33
Suggested Citation: Suggested Citation