Mutual Fund Performance and Flows During the COVID-19 Crisis

We present a comprehensive analysis of the performance and flows of U.S. actively-managed equity mutual funds during the COVID-19 crisis of 2020. We find that most active funds underperform passive benchmarks during the crisis, contradicting a popular hypothesis. Funds with high sustainability ratings perform well, as do funds with high star ratings. Fund outflows surpass pre-crisis trends, but not dramatically. Investors favor funds that apply exclusion criteria and funds with high sustainability ratings, especially environmental ones. Our finding that investors remain focused on sustainability during this major crisis suggests they view sustainability as a necessity rather than a luxury good.

Keywords: COVID-19, mutual funds, sustainability

JEL Classification: G01, G11, G12, G14, G23

Suggested Citation: Suggested Citation

Pastor, Lubos and Vorsatz, Blair, Mutual Fund Performance and Flows During the COVID-19 Crisis (August 13, 2020). Chicago Booth Research Paper No. 20-18, Fama-Miller Working Paper, Available at SSRN: https://ssrn.com/abstract=3648302 or http://dx.doi.org/10.2139/ssrn.3648302