What Drives Investment Flows into Social Trading Portfolios?

Journal of Financial Research, Forthcoming

Posted: 20 Jul 2017 Last revised: 21 Feb 2019

See all articles by Florian Röder

Florian Röder

University of Giessen - Department of Financial Services

Andreas Walter

University of Giessen - Department of Financial Services

Date Written: January 1, 2019

Abstract

We investigate investment flows into more than 5,300 social trading portfolios that are issued
as structured products and are tradable at a regular exchange. We find that investment flows
chase past performance. However, in contrast to mutual fund flows, the flow-performance
relation exists nearly exclusively for the best performing social trading portfolios. Flows follow
raw returns rather than factor model alphas. Additionally, flows are highly persistent. Finally,
social trading portfolios with higher visibility on the web page of the social trading platform as
well as traders communicating actively to investors via public comments attract higher inflows.

Keywords: Social Trading, Flow-Performance Relationship, Investment Flows, FinTech

JEL Classification: D14, G11, G23

Suggested Citation

Röder, Florian and Walter, Andreas, What Drives Investment Flows into Social Trading Portfolios? (January 1, 2019). Journal of Financial Research, Forthcoming. Available at SSRN: https://ssrn.com/abstract=3000929 or http://dx.doi.org/10.2139/ssrn.3000929

Florian Röder (Contact Author)

University of Giessen - Department of Financial Services ( email )

Licher Str, 74
Giessen, 35394
Germany

Andreas Walter

University of Giessen - Department of Financial Services ( email )

Betriebswirtschaftslehre V
Giessen, 35394
Germany

HOME PAGE: http://wiwi.uni-giessen.de/ma/dat/walter/Andreas_Walter/

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