 The “Betting” behavior of mutual fund familiesYanran Wu and Lili Meng Finance Research Letters, 2025, vol. 77, issue C Abstract: In a world where investors often gamble on the next “big win,” this study exposes the hidden motives and conflicts of interest driving mutual fund families to adopt lottery-like stock strategies. Using a sample of Chinese open-end mutual funds from 2004 to 2022, we find that fund families engage in “betting” by encouraging most, if not all, of their affiliated funds to pursue aggressive lottery-based investments. Although Chinese fund investors do not exhibit a distinct preference for lottery-like stocks, they do chase short-term performance. Our findings suggest that whether fund families can boost fund inflows through a lottery-based strategy hinges on their ability to deliver strong performance. However, fund investors do not hold the entire family of funds, and the performance of individual funds reverses in the latter half of the year—even for those within the most aggressive fund families. As a result, while fund families secure a “double win,” the associated risks and potential losses are ultimately borne by the investors. Keywords: Mutual fund families; Lottery strategies; Performance; Fund flows; Conflicts of interest; Availability bias (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:finlet:v:77:y:2025:i:c:s1544612325002454 DOI: 10.1016/j.frl.2025.106981 Access Statistics for this article Finance Research Letters is currently edited by R. Gençay More articles in Finance Research Letters from Elsevier |
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