Abstract
This study documents a significant relation between changes in commodity prices and investors' price sensitivity in the market for mutual funds. Specifically, price sensitivity⸺defined as the negative relation between fund-level flows and a fund's cost of ownership⸺is more pronounced in periods when energy commodity prices increase sharply. Aggregate flows into actively managed funds relative to the cheaper passively managed funds decrease (increase) when energy prices rise (fall). The results furnish novel evidence supporting an integrated view of the representative “consumer-investor,” whose price sensitivity in choosing financial products is related to price shocks in household consumption goods.
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