Smart or Dumb? Asset Allocation Ability of Mutual Fund Investors and the Role of Broker Advice
39 Pages Posted: 1 Mar 2020
Date Written: February 1, 2010
In this paper, I investigate the asset allocation ability of mutual fund investors. Specifically, I examine differences among non-proprietary brokers, proprietary brokers and direct channels regarding their asset allocation ability. In aggregate, mutual fund investors do not seem to have superior asset allocation ability. However, I do find that money flows through non-proprietary brokers show significantly higher asset allocation performance than money flows through proprietary brokers. This is consistent with the view that non-proprietary agents are more likely to act on behalf of their customers as opposed to proprietary agents who represent their affiliated companies.
Keywords: Mutual funds, asset allocation, investor sentiment, brokers
JEL Classification: G1, G2, G11, G12, G24
Suggested Citation: Suggested Citation