The global financial crisis and the mutual fund flow–performance relationship

Wang, Yuchen; Watson, John; Wickramanayake, Jayasinghe

doi:10.1111/twec.12673

Cited by 11 publications

(29 citation statements)

References 86 publications

(159 reference statements)

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“…Inverse conclusions about well-and moderately-performing funds have been reported by Ferreira et al [22]. Wang et al [23] found that a back-end load will shrink net flow-performance sensitivity. Differing from those studies, Navone [24] firstly stated that investors consider operating expenses and performance to be equally important and explored the effect of performance on the relationship between fund flow and operating expenses.…”

Section: Effect Of Performance On the Flow-fee Relationshipmentioning

confidence: 89%

“…For the load fee, in the U.S. market, funds are purchased directly with fund underwriters or indirectly via brokers; the load fee is the fee charged by brokers or advisors for their services [12]. Mixed results suggest that the load fee has a two-sided effect on fund flows: a high load fee reduces the search cost due to its advertising role and increases the net flow [15,36]; a high load fee is regarded as a burden on the return of funds due to its salience and decrease in the net flow [23,37,38]. Barber et al [13] demonstrated that the negative effect of load fee salience always offsets the advertising role of the fee.…”

Section: Effect Of Fund Fees On Mutual Fund Flowsmentioning

confidence: 99%

“…Some have found that participant costs, mainly including search costs, can substitute performance in affecting the fund flow when exploring the effect of the cost on the flow-performance relationship according to different performance levels [21,22]. Wang et al [23] studied the impact of the back-end load on flow-performance sensitivity on a full sample. Navone [24] found that fund fees and performance are equally important to investors and investigated the impact of performance on the flow-operating expense relationship across different performance levels.…”

Section: Introductionmentioning

confidence: 99%

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Open-End Funds for Sustainable Economic Growth in China: The Relationship between Load Fees, Performance, and Flows

2019

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The financial market, including the fund market, has an increasingly important role in facilitating sustainable economic development. In this study, we examine whether investors react rationally to fund fees through the investigation of the impact of fee structures on investor behavior with open-end funds in China. We aim to determine whether performance influences the effect of the load fee on fund flows. Based on panel data that contained 240 open-end funds for the period of 2008 to 2017, we offer insight into the relationship between fee structure and the flow of open-end funds in China and find that investors react more sensitively to the load fee than operating expenses. Specifically, the coefficients of operating expenses were found to be insignificant in all regression analyses, while almost all the coefficients of load fees were statistically significant. In addition, our findings indicate that the load fee decreases net flow mainly through increasing redemption, and high load fees can make investors more rational to redeem funds with low performance. High load fees can influence investors to sell funds that perform worse in moderately performing funds, where a high load fee can increase investors’ rationality and motivate them to sell funds, resulting in the mitigation of the disposition effect. We also find that investors in larger funds and aggressive growth funds, as well as those who invest with institutional investors and higher liquidity, react more insensitively to load fees, which can be illustrated by the distraction effect.

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Section: Effect Of Performance On the Flow-fee Relationshipmentioning

confidence: 89%

Section: Effect Of Fund Fees On Mutual Fund Flowsmentioning

confidence: 99%

Section: Introductionmentioning

confidence: 99%

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Open-End Funds for Sustainable Economic Growth in China: The Relationship between Load Fees, Performance, and Flows

2019

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“…The recent trend in the literature focuses on the importance of volatility as a measure of risk due to its role in affecting investors' behavior and the market direction. Busse (1999) suggests that mutual fund performance is associated with market volatility, and a recent paper by Wang et al (2018) provides evidence of investors' reaction to the volatility level of the market. Jordan and Riley (2015) investigate the relationship between funds' performance with market volatility.…”

Section: Literature Reviewmentioning

confidence: 99%

“…The mutual fund industry has attracted the interest of academics and financial market participants due to the rapid growth of total assets under management over recent decades. The finance literature has provided a large body of work on mutual fund performance from different aspects (e.g., Cuthbertson et al, 2016;Wang et al, 2018;Wulfmeyer, 2016). The existing literature provides a sufficient analysis of developed markets, whereas emerging markets have received relatively little attention despite their accelerated growth, dynamic change and rapid influence on the world economy.…”

Section: Introductionmentioning

confidence: 99%

Do Stock Market Risk Factors Explain Mutual Fund Returns? Evidence from Saudi Arabia

Alsubaiei¹

2021

HMS-SJKFU

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This paper examines the risk factors of the Saudi Arabian equity market using an extensive data set. The study demonstrates which risk factors explain mutual fund returns in the largest mutual fund market in the Middle East, a fast-growing economy and a major player in the oil market. This paper also assesses the global and emerging market risk factors. This study analyzes 256 equity funds that operated in Saudi Arabia from January 2006 to July 2017. Time series regression models (e.g., the CAPM, the Fama and French three-factor model and the Carhart four-factor model) are used. In addition, modified versions of the asset pricing models were applied by adding stock market volatility and oil market volatility. The results indicate that the single-factor model, representing the market portfolio, captures most of the mutual funds’ excess returns. Size, value and momentum factors do not enhance the explanatory power of mutual fund returns significantly. The emerging market risk factors capture a small portion of the return variations where most effects were explained by the market risk factor. In explaining these results, we emphasize the important implications for investors, academics and regulators to better understand the risk factors that drive fund returns in a fast-growing emerging market.

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Improving Service Quality of Wealth Management Bank for High-Net-Worth Customers During COVID-19: A Fuzzy-DEMATEL Approach

Lin

Chang

Huang

et al. 2021

Int. J. Fuzzy Syst.

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The 2019–2020 COVID-19 pandemic has caused an economic turndown and high volatility in the global financial markets. Determining the factors that influence services to high-net-worth customers who typically have large investments in the financial markets is important for wealth management banks. This study constructs a hybrid approach by integrating the fuzzy logic and Decision-making Trial and Evaluation Laboratory (DEMATEL) methods to identify the most influential criteria affecting the performance of wealth management banks in Taiwan during the 2019–2020 COVID-19 pandemic. Surveys and interviews are designed using four dimensions (bank performance, service quality, customer relationship, and COVID-19) and 16 criteria for 10 banking executives using fuzzy linguistic scales, to obtain their expert opinions. The results show the order of influence as being service quality, customer relationships, bank performance, and COVID-19. The most important criteria are customized investment information (in-service quality), switching behavior (in-customer relationship), fee income (in-bank performance), and the number of confirmed cases in the top five countries affected by COVID-19. The managerial implication is that wealth management banks should focus on improving their service quality. Banks may strive to provide a wide range of customized investment information and increase customers’ usage of personalized financial products and services. The results of this study will benefit bank managers in serving high-net-worth individuals during the crisis period.

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The global financial crisis and the mutual fund flow–performance relationship

Cited by 11 publications

References 86 publications

Open-End Funds for Sustainable Economic Growth in China: The Relationship between Load Fees, Performance, and Flows

Open-End Funds for Sustainable Economic Growth in China: The Relationship between Load Fees, Performance, and Flows

Do Stock Market Risk Factors Explain Mutual Fund Returns? Evidence from Saudi Arabia

Improving Service Quality of Wealth Management Bank for High-Net-Worth Customers During COVID-19: A Fuzzy-DEMATEL Approach

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