Learning about Mutual Fund Managers

We study capital allocations to managers with two mutual funds, and show that investors learn about managers from their performance records. Flows into a fund are predicted by the manager's performance in his other fund, especially when he outperforms and when signals from the other fund are mo...

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Veröffentlicht in:	The Journal of finance (New York) 2016-12, Vol.71 (6), p.2809-2860
Hauptverfasser:	CHOI, DARWIN, KAHRAMAN, BIGE, MUKHERJEE, ABHIROOP
Format:	Artikel
Sprache:	eng
Schlagworte:	Asset management Capital costs Capital investments Capital management Cost allocation Investment strategies Investment trusts Investor behavior Investors Learning Linear regression Money management Mutual funds Portfolio investments Portfolio management Portfolio performance Stock futures Studies
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container_end_page	2860
container_issue	6
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container_title	The Journal of finance (New York)
container_volume	71
creator	CHOI, DARWIN KAHRAMAN, BIGE MUKHERJEE, ABHIROOP
description	We study capital allocations to managers with two mutual funds, and show that investors learn about managers from their performance records. Flows into a fund are predicted by the manager's performance in his other fund, especially when he outperforms and when signals from the other fund are more useful. In equilibrium, capital should be allocated such that there is no cross-fund predictability. However, we find positive predictability, particularly among underperforming funds. Our results are consistent with incomplete learning: while investors move capital in the right direction, they do not withdraw enough capital when the manager underperforms in his other fund.
doi_str_mv	10.1111/jofi.12405
format	Article
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subjects	Asset management Capital costs Capital investments Capital management Cost allocation Investment strategies Investment trusts Investor behavior Investors Learning Linear regression Money management Mutual funds Portfolio investments Portfolio management Portfolio performance Stock futures Studies
title	Learning about Mutual Fund Managers
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