Fund family versus mutual fund performance: evidence from the Indian investors’ perspective

Yogesh Chauhan (), Ajay Kumar Mishra () and Bhavik Parikh ()
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Yogesh Chauhan: Indian Institute of Management Raipur
Ajay Kumar Mishra: IIT Kharagpur
Bhavik Parikh: St. Francis Xavier University

Journal of Asset Management, 2023, vol. 24, issue 4, No 3, 268-283

Abstract: Abstract We evaluate investors' learning from past fund performance and subsequent capital allocation decisions in mutual funds in an emerging market setup. We find that investors in India learn more about funds' ability to generate excess returns from past funds’-family performances. We explore two possible channels, common skill effect and negative correlation effects, through which investors observe fund-family performance and its impact on future fund flows. We observe that fund-family performance dominates individual fund performance when the common skill effect is stronger than the negative correlation effect. Our findings suggest that investors can use fund-family resources to understand funds' alpha-generating skills. Overall, our result highlights the new learning perspective of Indian fund investors.

Keywords: Mutual fund flows; Flow-performance sensitivity; Family fund; The cross-fund learning (search for similar items in EconPapers)
JEL-codes: G10 G11 G20 G23 (search for similar items in EconPapers)
Date: 2023
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Citations: View citations in EconPapers (1)

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DOI: 10.1057/s41260-022-00301-0

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