Does Institutional Ownership Predict Mutual Fund Performance? An Examination of Undiscovered Holdings within 13(f) Reports

Forthcoming in the European Financial Management

90 Pages Posted: 17 Aug 2014 Last revised: 26 Oct 2018

See all articles by Xuhui (Nick) Pan

Xuhui (Nick) Pan

University of Oklahoma

Kainan Wang

University of Toledo

Blerina Bela Zykaj

Clemson University

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Date Written: October 22, 2018

Abstract

We show that institutional ownership in equity mutual funds predicts fund performance. Our measure of institutional ownership in mutual funds is directly from institutions’ quarterly 13(f) filings so it provides a broader coverage of institutional investment in mutual funds than existing studies. Most institutions holding mutual funds are independent investment advisors and bank trusts who invest in mutual funds on behalf of their clients. Our results show that funds held by institutions perform better than funds not held by institutions for at least three years. Institutions’ informational advantage is the main driver of the outperformance of institution-held funds.

Keywords: institutional investor holdings; 13(f) filings; mutual funds; mutual-fund performance

JEL Classification: G11, G23

Suggested Citation

Pan, Xuhui (Nick) and Wang, Kainan and Zykaj, Blerina Bela, Does Institutional Ownership Predict Mutual Fund Performance? An Examination of Undiscovered Holdings within 13(f) Reports (October 22, 2018). Forthcoming in the European Financial Management, Available at SSRN: https://ssrn.com/abstract=2481454 or http://dx.doi.org/10.2139/ssrn.2481454

Xuhui (Nick) Pan

University of Oklahoma ( email )

307 W Brooks
Norman, OK 73019
United States

Kainan Wang

University of Toledo ( email )

Department of Finance
Mail Stop 103
Toledo, OH 43606
United States

Blerina Bela Zykaj (Contact Author)

Clemson University ( email )

101 Sikes Ave
Clemson, SC 29634
United States

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