What Drives Investment Flows into Social Trading Portfolios?
Journal of Financial Research, Forthcoming
Posted: 20 Jul 2017 Last revised: 21 Feb 2019
Date Written: January 1, 2019
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: Suggested Citation