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.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.