Internet Search, Fund Flows, and Fund Performance

69 Pages Posted: 13 May 2021

See all articles by Hong-Yi Chen

Hong-Yi Chen

National Chengchi University - Department of Finance

Hsuan-Chi Chen

University of New Mexico

Christine W. Lai

National Taiwan Normal University

Date Written: April 20, 2021

Abstract

This study uses the Google search volume index as a direct measure of investor attention to explore the connection between attention-grabbing information and fund flows, future performance, and the survivorship of newly issued funds. We find that investors often engage in attention-driven purchases of new funds that have captured their attention online. However, fund investors who conduct internet searches and make attention-driven purchases are less sophisticated and fail to allocate their capital for earning abnormal returns. We also find that attention-induced inflows can help sustain new funds in competitive fund markets via potential mitigation of mergers and liquidations. Our robustness checks show similar results for old funds, but attention-driven fund flows do not enhance the survival of old funds.

Keywords: Internet search, fund flows, fund performance, Google Trends, search volume index

JEL Classification: G11, G14

Suggested Citation

Chen, Hong-Yi and Chen, Hsuan-Chi and Lai, Christine W., Internet Search, Fund Flows, and Fund Performance (April 20, 2021). Journal of Banking and Finance, Forthcoming, Available at SSRN: https://ssrn.com/abstract=3844638

Hong-Yi Chen (Contact Author)

National Chengchi University - Department of Finance ( email )

No. 64, Chih-Nan Road
Section 2
Wenshan, Taipei, 11623
Taiwan

Hsuan-Chi Chen

University of New Mexico ( email )

107 Humanitites Building
Albuquerque, NM 87131-1221
United States

Christine W. Lai

National Taiwan Normal University ( email )

162, Hoping East Road, sec. 1
Taipei 106
Taiwan

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