Family Values and the Star Phenomenon: Strategies of Mutual Fund Families

46 Pages Posted: 10 Aug 2011  

Vikram K. Nanda

University of Texas at Dallas - School of Management - Department of Finance & Managerial Economics

Zhi Jay Wang

University of Oregon - Charles H. Lundquist School of Business

Lu Zheng

University of California, Irvine - Paul Merage School of Business

Date Written: July 2003

Abstract

We examine the extent to which a fund’s cash flows are affected by the stellar performance of other funds in its family - and consequences of such spillovers. We show that star performance results in greater cash inflow to the fund and to other funds in its family. Moreover, families with higher variation in investment strategies across funds are shown to be more likely to generate star performance. We argue that spillovers may induce lower ability families to pursue star creating strategies. Consistent with our conjecture, families with high variation in investment strategies across funds significantly underperform low variation families.

Keywords: Mutual Fund Families, Fund Flows, Performance

Suggested Citation

Nanda, Vikram K. and Wang, Zhi Jay and Zheng, Lu, Family Values and the Star Phenomenon: Strategies of Mutual Fund Families (July 2003). Available at SSRN: https://ssrn.com/abstract=1906798 or http://dx.doi.org/10.2139/ssrn.1906798

Vikram K. Nanda

University of Texas at Dallas - School of Management - Department of Finance & Managerial Economics ( email )

2601 North Floyd Road
P.O. Box 830688
Richardson, TX 75083
United States

Zhi Jay Wang (Contact Author)

University of Oregon - Charles H. Lundquist School of Business ( email )

1208 University of Oregon
Eugene, OR 97403-1208
United States

Lu Zheng

University of California, Irvine - Paul Merage School of Business ( email )

Irvine, CA California 92697-3125
United States
9498248365 (Phone)

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