CHAPTER 8 The Behavior of Mutual Fund Investors

Lu Zheng

Paul Merage School of Business, University of California, Irvine

1. Introduction

2. Examining Investor Behavior Using Fund Flows

2.1. Estimating Mutual Fund Flows
2.2. The Decision to Choose Among Mutual Funds
2.3. Mutual Fund Flows and Aggregate Market Returns

3. Investment Performance of Mutual Fund Investors

4. Investor Externality

4.1. Liquidity Costs
4.2. Stale-Price Arbitrage

5. Strategies of Mutual Funds

6. Conclusion

References

Abstract

This chapter reviews findings on the behavior of mutual fund investors. It first outlines the evidence on how fund investors choose among many funds in the marketplace and how aggregate fund flows relate to market returns. It then explores ...

Get Handbook of Financial Intermediation and Banking now with the O’Reilly learning platform.

O’Reilly members experience books, live events, courses curated by job role, and more from O’Reilly and nearly 200 top publishers.

Start your free trial