Measuring Innovation and Product Differentiation: Evidence from Mutual Funds
We study innovation and product differentiation using a uniqueness measure based on textual analysis of prospectuses. We find that small and start-up families have higher start rates than larger families, and their products are more unique. Unique strategies attract more inflows in the first three y...
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| Veröffentlicht in: | The Journal of finance (New York) 2020-04, Vol.75 (2), p.779-823 |
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| container_title | The Journal of finance (New York) |
| container_volume | 75 |
| creator | KOSTOVETSKY, LEONARD WARNER, JEROLD B. |
| description | We study innovation and product differentiation using a uniqueness measure based on textual analysis of prospectuses. We find that small and start-up families have higher start rates than larger families, and their products are more unique. Unique strategies attract more inflows in the first three years, and investors respond more to text-based uniqueness than other measures such as holdings or returns uniqueness. For established funds, word uniqueness has weak negative power for explaining returns, so investors in competitive equilibrium do not sacrifice much performance to get specialized products. Uniqueness attenuates the flow-performance relation, reducing the risk of investor outflows. |
| doi_str_mv | 10.1111/jofi.12853 |
| format | Article |
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| ispartof | The Journal of finance (New York), 2020-04, Vol.75 (2), p.779-823 |
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| language | eng |
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| source | Access via Wiley Online Library; JSTOR Archive Collection A-Z Listing |
| subjects | Differentiation Innovations Mutual funds Power Product differentiation Textual analysis Uniqueness |
| title | Measuring Innovation and Product Differentiation: Evidence from Mutual Funds |
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