Sentimental Mutual Fund Flows

30 Pages Posted: 20 May 2020

See all articles by George J. Jiang

George J. Jiang

Washington State University

H. Zafer Yüksel

University of Massachusetts Boston

Multiple version iconThere are 2 versions of this paper

Date Written: November 2019


We show that many stylized empirical patterns for mutual fund flows are driven by investor sentiment. Specifically, when sentiment is high, investors exhibit a stronger tendency of chasing past fund performance; fund flows are less sensitive to fund expenses; and investors are attracted more to funds with sheer visibility. Moreover, the well‐documented positive relation between fund flows and future fund performance is significant only during high sentiment periods and is mainly driven by expected component of fund flows. Finally, we show that mutual fund investors exhibit a significantly negative timing ability at the individual fund level when sentiment is high.

Keywords: flow‐performance relation, fund expenses, fund performance, fund visibility, investor sentiment, investor timing mutual fund flows

JEL Classification: G11, G02, G23

Suggested Citation

Jiang, George and Yüksel, H. Zafer, Sentimental Mutual Fund Flows (November 2019). Financial Review, Vol. 54, Issue 4, pp. 709-738, 2019, Available at SSRN: or

George Jiang (Contact Author)

Washington State University ( email )

Department of Finance and Management Science
Carson College of Business
Pullman, WA 99-4746164
United States
509-3354474 (Phone)


H. Zafer Yüksel

University of Massachusetts Boston

100 William T Morrissey Blvd
Boston, MA 02125
United States

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