Abstract
We examine the investment flow of open-end equity mutual funds. With a unique data from Taiwan, we are able to investigate the buy and sell behavior of mutual investors separately. We find that most investors that invest in large mutual funds are small-amount investors, while those that invest in small funds invest a much larger amount. Small-amount investors of large funds tend to chase past winners and redeem shares once fund performance improves. They are more likely to avoid actively managed funds with high turnover. On the other hand, large-amount investors of small funds appear to be dispassionate buyers whose purchases are not remarkably affected by short-term performance. They are more likely to keep performance-improving funds, redeem the losers, and pay higher management fees.
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