SSE/EFI Working Paper Series in Economics and Finance
Information Costs and Mutual Fund Flows
() and Anna Westerberg
Abstract: This paper examines how investor and capital flows into
mutual funds in the Swedish pension system are related to fund
characteristics. Similarly to U.S. studies, we show that individuals chase
past returns and have a strong preference for lower-fee funds. However, our
results suggest that past returns are less important than previous studies
suggest. A more important determinant of fund inflows is information costs.
For instance, foreign-based funds with a track record similar to that of
domestic funds attract fewer investors and receive less capital. Moreover,
new funds without a track record also receive lower inflows.
Keywords: Flows; Information; Pension System; Portfolio Choice; (follow links to similar papers)
JEL-Codes: G11; G23; H55; (follow links to similar papers)
31 pages, January 28, 2004
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