The Relation between Performance and Flows of Mutual Funds: Case of the Croatian Fund Market

Abstract

With pre 2008 euphoria and present depression, inflows to open investment funds and outflows from it shaped general market conditions on the Croatian fund market. This article studies the relationship between performance of open ended investment funds and inflows (outflows) to them on Croatian funds data in an environment without long fund data history, with small number of funds and relatively illiquid underlying equity market. The results suggest that the driving forces behind funds' flows encompass the combined influence of present month fund's performance and persistency of past performances. At the end of our analysis we test the significance of the introduced explanatory variables on the data sets that include data for each particular fund. The significance of the introduced explanatory variables varies among different funds, although a general level of the explanatory power is maintained on average.

The Determinants of Convexity in the Flow-Performance Relationship: A Study of Pakistani Mutual Funds

“…These results indicate that the flow-performance relationship curve is also convex in the Pakistani mutual fund market. Our findings are very similar to the developed countries (Smith, 1978;Ippolito, 1992;Chevalier & Elision, 1997;Siri and Tuffano, 1998;Fant and Neal, 2000;Berk & Green, 2004;Ferreira et al, 2012;Bellando & Tran Dieu, 2011;Brborovic & Posedel, 2014;Mazur et al, 2017). Here our primary interest is in the coefficient of the second interacting variable.…”

The Effect of Performance on Israeli Equity Fund Flows

“…They found that there is a short-term positive momentum between provident fund yields and flows and investors engage in short-term yield chasing. Brborovic and Posedel (2014) studied the small and relatively illiquid equity market in Croatia. They showed that a combination of present and past performance influenced the fund flows.…”