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Behavioral Finance: Are the Disciples Profiting from the Doctrine?

52 Pages Posted: 17 Sep 2006 Last revised: 26 Jul 2012

Colbrin Wright

Brigham Young University

Vaneesha Boney

University of Denver

Prithviraj Banerjee

Florida State University - Department of Finance

Date Written: August 22, 2006

Abstract

We analyze 16 mutual funds that are self-proclaimed or media-identified disciples of behavioral finance to determine whether: (a) they successfully attract investment dollars and (b) their strategies earn abnormal returns for their investors. We find these funds are successfully attracting investment dollars, outperform S&P 500 index funds, load especially heavily on the HML factor, but fail to earn risk-adjusted abnormal returns. Our results suggest behavioral mutual funds are tantamount to value investing and not much more.

Keywords: behavioral finance, behavioral mutual funds, market efficiency, mutual funds, behavioral investing

JEL Classification: G11, G12, G14

Suggested Citation

Wright, Colbrin and Boney, Vaneesha and Banerjee, Prithviraj, Behavioral Finance: Are the Disciples Profiting from the Doctrine? (August 22, 2006). Journal of Investing, Vol. 17, No. 7, 2008. Available at SSRN: https://ssrn.com/abstract=930400 or http://dx.doi.org/10.2139/ssrn.930400

Colbrin Wright (Contact Author)

Brigham Young University ( email )

United States
(801) 422 1224 (Phone)

Vaneesha Boney

University of Denver ( email )

2101 S University Blvd
Denver, CO 80208
United States
303-871-2299 (Phone)

Prithviraj Banerjee

Florida State University - Department of Finance ( email )

Tallahassee, FL 32306-1042
United States

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