Cash Flows and Returns of Mutual Funds Investors: Empirical evidence of the marketplaces of investors
Quarterly Journal of Securities Exchange

Quarterly Journal of Securities Exchange

Cash Flows and Returns of Mutual Funds Investors: Empirical evidence of the marketplaces of investors

Document Type : Original Article

Authors
Seyed Mojtaba Mirlohi 1
Ali Ebrahimnejad 2
Mehrdad Farahabadi 3
1 Assistant Professor of Financial Management of Shahrood University of Technology
2 Assistant Professor of Financial Management, Faculty of Management and Economics, Sharif University of Technology
3 Ph.D. student of financial engineering, University of Tehran, Kish International Campus
10.22034/jse.2018.11127
Abstract
In analyzing mutual funds’ performance, the funds’ return is typically deemed as a performance measure and this measure is not necessarily discriminated by the virtually investors’ realized return. This is despite the fact that depending on the investors’ timing strategy and the amount they decide to invest, the actually realized return may likely be different with the announced return by the fund, which is normally based on the buy and hold strategy. In the present study, we are going to answer how investors’ timing decisions in mutual funds may affect their returns and eventually their behavior. To do so, we have exploited the registered mutual funds’ cash flow turn over over 1390 to 1395 (2011-2016) and finally come up with conclusion that inefficient market timing by mutual funds investors’ have culminated in diminishing 2.2 % their monthly return (30 % annually). This considerable negative effect can significantly alleviate the investors realized return even in outperforming mutual funds
Keywords
: Investors Market Timing
Mutual Fund performance
Mutual Fund Cash Flows
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Quarterly Journal of Securities Exchange
Volume 11, Issue 42
Summer 2018
Pages 5-28