Transient emotions, perceptions of well-being, and mutual fund flows

William J. Bazley, Arash Dayani and Sima Jannati

Finance Research Letters, 2021, vol. 41, issue C

Abstract: Investors’ sentiment is typically proxied by aggregate measures. However, it is composed of distinguishable elements, including impermanent emotions and subjective appraisals of well-being. We show that experiencing transient happiness is associated with flows to mutual funds in the following month. When considering funds’ investment style, heterogeneous effects arise. Happiness and perceived well-being correspond with flows to growth funds but not value funds. Ultimately, broad measures of sentiment may conceal nuances of investor behavior, which can potentially affect asset prices through investment style preferences.

Keywords: Investor behavior; Portfolio choice; Sentiment (search for similar items in EconPapers)
JEL-codes: G10 G23 G41 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:41:y:2021:i:c:s1544612320316391

DOI: 10.1016/j.frl.2020.101825

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