Randomized trial reveals mutual funds that gain cash flow show better short-term performance in investing, suggesting a strategy worth considering.
A previous study finds evidence to support selection ability among active fund investors for equity funds listed in 1982. Using a large sample of equity funds, I find evidence that funds that receive more money subsequently perform significantly better than those that lose money. This effect is short‐lived and is largely but not completely explained by a strategy of betting on winners. In the aggregate, there is no significant evidence that funds that receive more money subsequently beat the market. However, it is possible to earn positive abnormal returns by using the cash flow information for small funds.
No takes yet. Share an insight, caveat, or question.
Lu Zheng (1999) studied this question.
Synapse has enriched 4 closely related papers on similar clinical questions. Consider them for comparative context: