Purchase and redemption decisions of mutual fund investors and the role of fund families

Stephan Jank and Michael Wedow

The European Journal of Finance, 2013, vol. 19, issue 2, 127-144

Abstract: This paper investigates the purchases and redemptions of a large cross-sectional sample of German equity funds. We find that investors not only punish bad performance by selling their shares, but also have a tendency to sell winners. Investors in large fund families show higher sales and redemption rates. Furthermore, family size also affects the flow-performance relationship: investors in large families punish bad performance more. Last, we find that inner family rankings play an important part for redemptions, with investors strongly redeeming their shares from intra-family losers. This result provides a potential reconciliation to the apparent contradiction between the low average holding period of mutual fund investors and the lack of investor discipline.

Date: 2013
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Citations: View citations in EconPapers (16)

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Working Paper: Purchase and redemption decisions of mutual fund investors and the role of fund families (2010)
Working Paper: Purchase and redemption decisions of mutual fund investors and the role of fund families (2010)
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Persistent link: https://EconPapers.repec.org/RePEc:taf:eurjfi:v:19:y:2013:i:2:p:127-144

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DOI: 10.1080/1351847X.2012.662908

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