Is Money Really 'Smart'? New Evidence on the Relation between Mutual Fund Flows, Manager Behavior, and Performance Persistence
Is Money Really ‘Smart’? New Evidence on the Relation between Mutual Fund Flows, Manager Behavior, and Performance Persistence ArXiv ID: ssrn-414420 “View on arXiv” Authors: Unknown Abstract Mutual fund returns strongly persist over multi-year periods - that is the central finding of this paper. Further, consumer and fund manager behavior both play Keywords: Mutual Fund Persistence, Performance Persistence, Fund Manager Behavior, Investor Sentiment, Long-Term Returns, Mutual Funds Complexity vs Empirical Score Math Complexity: 4.0/10 Empirical Rigor: 8.5/10 Quadrant: Street Traders Why: The paper employs extensive empirical data analysis (CRSP mutual fund database, cross-sectional regressions, style adjustments) to test hypotheses about fund flows and performance, but uses relatively standard financial econometrics without complex mathematical derivations. flowchart TD A["Research Goal<br>Test Persistence of Mutual Fund Returns<br>and Roles of Manager Behavior & Flows"] --> B["Key Methodology<br>Longitudinal Performance Analysis"] B --> C{"Data / Inputs"} C --> C1["Multi-Year Mutual Fund Returns"] C --> C2["Manager Behavior Data"] C --> C3["Net Flows & Investor Sentiment"] C1 & C2 & C3 --> D["Computational Process<br>Regression & Persistence Metrics"] D --> E["Key Findings / Outcomes"] E --> E1["Strong Multi-Year Persistence Found"] E --> E2["Manager Behavior Explains Persistence"] E --> E3["Flows Reinforce Manager Behavior"]