Performance Chasing Fund Flows and Fund Size in R

Authors: WenHsiu Chou William G Hardin

Publish Date: 2013/10/08

Volume: 49, Issue: 3, Pages: 379-412

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Abstract

Real estate mutual funds have grown dramatically in number size scope and assets under management over the last 15 years but little assessment is evident The present study addresses this limitation Better prior period performance is associated with greater shares of fund inflows for a period Returns however are negatively associated with increased fund flows and fund size Investors chase past performance limiting fund managers’ ability to optimize investments Under normal market conditions but departing from typical mutual fund performance real estate mutual fund returns generally exceed relevant benchmarks on a before expenses basis and match benchmark returns after expenses The ability to meet and exceed benchmark returns however does not hold during the financial crisis period Overall more established funds are shown to have higher returns while fund turnover is not a determinant of returns

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