Does Mutual Fund Family Size Matter? International Evidence

Abstract

We use data from 33 countries to study how a fund’s affiliation with large families impacts the shape of the flow-performance relationship. Our results show that family size affects the response of fund flows to performance differently depending on the sophistication of the investors. While less sophisticated investors are swayed by the visibility of funds affiliated with large and established families, more sophisticated investors are not. Affiliation with a large family increases the convexity of the flow-performance relationship in countries where investors are less sophisticated, but it decreases the convexity of the flow-performance relationship in countries with more sophisticated investors.

Keywords: Mutual funds, Flow-performance relationship, Fund family size, Investor sophistication

JEL Classification: G15, G23