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WHAT DRIVES INVESTMENT FLOWS INTO SOCIAL TRADING PORTFOLIOS?

Florian Röder and Andreas Walter

Journal of Financial Research, 2019, vol. 42, issue 2, 383-411

Abstract: We investigate investment flows into more than 5,300 social trading portfolios that are issued as structured products and are tradable at a regular exchange. We find that investment flows chase past performance. However, in contrast to mutual fund flows, the flow–performance relation exists nearly exclusively for the best performing social trading portfolios. Flows follow raw returns rather than factor model alphas. Additionally, flows are highly persistent. Finally, social trading portfolios with higher visibility on the web page of the social trading platform as well as traders communicating actively to investors via public comments attract higher inflows.

Date: 2019
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https://doi.org/10.1111/jfir.12174

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Persistent link: https://EconPapers.repec.org/RePEc:bla:jfnres:v:42:y:2019:i:2:p:383-411

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Journal of Financial Research is currently edited by Jayant Kale and Gerald Gay

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