Internet Search, Fund Flows, and Fund Performance
69 Pages Posted: 13 May 2021
Date Written: April 20, 2021
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: Suggested Citation