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1 – 10 of over 20000Noura Metawa, Saad Metawa, Maha Metawea and Ahmed El-Gayar
This paper deeply investigates the herd behavior of the Egyptian mutual funds under changing and different conditions of the market pre- and post-events and compares the impact of…
Abstract
Purpose
This paper deeply investigates the herd behavior of the Egyptian mutual funds under changing and different conditions of the market pre- and post-events and compares the impact of asymmetric risk conditions on the herding behavior of the Egyptian mutual funds in both up and down markets.
Design/methodology/approach
We test for the existence of herding for the whole period from 2003 to 2022, as well as for the pre-and post-different Egyptian uprising periods. We employ two well-known models, namely the cross-sectional standard deviation (CSSD) and cross-sectional absolute deviation (CSAD) models. Additionally, we use the quantile regression approach.
Findings
We find that the behavior of mutual funds does not change following the different political and social events. For the whole period, we find evidence of herding behavior using only the model of CSAD in down-market conditions. We generalize our finding to be evidence of the existence herding behavior in different quantiles, under only the down market in specific points’ pre, post or both given events throughout the whole series. Conversely, during the upper market, we show a full absence of herding behavior considering all different quantiles. When the market is down, managers are afraid of the condition of uncertainty, neglecting their own private information, avoid acting independently and consequently, following other mutual funds. When the market is up, managers become rational and act fully independent.
Research limitations/implications
Future research should delve deeper into the drivers of herding behavior, assess its longer-term effects, develop risk management strategies and consider regulatory measures to mitigate the potential negative impact on mutual fund performance and investor outcomes.
Practical implications
The study reveals that the behavior of mutual funds remains consistent despite various political and social events, suggesting a degree of resilience in their investment strategies. The research uncovers evidence of herding behavior in both high and low quantiles, but exclusively in down markets. In such conditions of market decline, fund managers appear to forsake their private information, exhibiting a tendency to follow the crowd rather than acting independently.
Social implications
The study reveals that the behavior of mutual funds remains consistent despite various political and social events, suggesting a degree of resilience in their investment strategies. The research uncovers evidence of herding behavior in both high and low quantiles, but exclusively in down markets. In such conditions of market decline, fund managers appear to forsake their private information, exhibiting a tendency to follow the crowd rather than acting independently. Future research should delve deeper into the drivers of herding behavior, assess its longer-term effects, develop risk management strategies and consider regulatory measures to mitigate the potential negative impact on mutual fund performance and investor outcomes.
Originality/value
The paper investigates the herd behavior of the Egyptian mutual funds under asymmetric risk conditions, the study follows the spectrum of the herding behavior analysis and Egyptian mutual funds, extending the research with imperial analysis of market conditions pre- and post-events including currency floating, COVID-19 and political elections. The study gives substantial recommendations for policymakers and investors in emerging markets mutual funds.
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Inderjit Kaur and K.P. Kaushik
Mutual funds in India have not been as favourable investment alternatives as in developed countries, as assets under management of mutual funds to gross domestic product in India…
Abstract
Purpose
Mutual funds in India have not been as favourable investment alternatives as in developed countries, as assets under management of mutual funds to gross domestic product in India have been 7-8 per cent compared to 37 per cent globally. Further, investor base of mutual funds has been narrow, as retail investors constitute 98 per cent of folios but contributed only 58 per cent of investments in September 2014. To broaden the investor base for mutual funds in India, it remains imperative to understand the determinants of investment behaviour of investors towards mutual funds. This study aims to achieve this objective.
Design/methodology/approach
Based on the theory of planned behaviour, the study examined the effect of awareness, attitude (perception for outcome) and socioeconomic conditions of an investor on his investment behaviour towards mutual funds with the logit model. The results are based on 450 valid responses from the primary survey in Delhi-NCR.
Findings
The research provided that investment behaviour could be explained with awareness, perception and socioeconomic characteristics of individual investors. Better awareness related to various aspects of mutual funds will have a positive effect on investment in mutual funds. Contrary to belief, risk perception for mutual funds had no effect on the investment decision. Further, socioeconomic characteristics such as age, gender, occupation, income and education of investors had an impact on the awareness about mutual funds.
Research limitations/implications
As the study has been confined to Delhi-NCR, it should be considered a pilot study and needs to be replicated in other states of India to have more robust results.
Practical implications
The study has implications for mutual funds and regulators. The study highlights a lack of awareness about mutual funds among particular sections of society as a reason for non-investment in mutual funds. The mutual funds and regulators need to focus on females, older age groups and middle-income groups in their efforts to improve their awareness about mutual funds. This would improve their investor base and flow of funds in mutual funds. Furthermore, the process of investment in mutual funds needs to simplified.
Originality/value
In an Indian context, this study has been the first attempt to understand the systematic relation between actual investment behaviour towards mutual funds and various determinants such as socioeconomic characteristics, awareness and attitude (perception) about mutual funds.
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Luminița Nicolescu and Florentin Gabriel Tudorache
This paper aims to make an analysis of investment behaviour in mutual funds, by looking at different investment decision influencers and trying to identify the extent to which the…
Abstract
Purpose
This paper aims to make an analysis of investment behaviour in mutual funds, by looking at different investment decision influencers and trying to identify the extent to which the investment decision is knowledge-based. The paper has three main purposes, namely, to assess the degree to which the considered factors influence investment decision-making in young capital markets from Central and Eastern Europe (CEE); to compare the investment behaviour in the three considered countries; and to characterise investment behaviour in periods of economic turbulence.
Design/methodology/approach
The researchers considered a model of investment behaviour comprising six influencing factors. Inferential statistics through multiple linear regression was applied using the MATLAB R2014a software. The decision to invest was measured by the flow of new capital attracted by the fund (dependent variable) and the considered influencing factors (independent variables) were: the size of the fund, the risk associated to the fund, the growth of the fund, the growth of the fund category, the performance of the fund in its category. The research was conducted in Romania, Slovakia and Hungary. The period of study included the global economic crisis of 2007-2008.
Findings
The results illustrated that all considered factors do have an influence on the investment behaviour of investors in CEE, but with different levels of impact. The study concludes that the investment decision is partially knowledge-based, as investors in the region consider only some of the available information when making the decision to invest. Investment behaviour of investors in CEE is rather similar than dissimilar when deciding to invest in mutual funds. However, based on the differences between countries, it can be stated that the Hungarian investor is more mature and more informed than the others, when making investment decisions.
Originality/value
The study contributes to the exiting literature through the analysis of investment behaviour in young capital markets that are less studied in the literature. The limited number of studies considering mutual funds, usually comprise one fund category, while the present research considers all five most prevalent mutual funds categories for the studied period. It also contributed by collecting data from a less studied geographical region, CEE with three specific case studies, namely, Romania, Slovakia and Hungary that are looked at in a comparative manner.
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Umi Widyastuti, Erie Febrian, Sutisna Sutisna and Tettet Fitrijanti
This study aims to determine antecedents of market discipline. A model was constructed by extending the theory of planned behavior (TPB) to explore the cognitive, psychological…
Abstract
Purpose
This study aims to determine antecedents of market discipline. A model was constructed by extending the theory of planned behavior (TPB) to explore the cognitive, psychological and social factors that influence the market discipline in the form of withdrawal behavior.
Design/methodology/approach
This study applied a quantitative approach by surveying 181 Indonesian retail investors in Sharia mutual funds, which were represented by civil servants. The samples were collected using the purposive sampling technique. This study used the partial least square–structural equation model to analyze the data.
Findings
The results revealed that the Islamic financial literacy, the attitudes toward withdrawal, the subjective norms and the perceived behavioral control had a positive significant effect on the withdrawal intention, whereas financial risk tolerance had an insignificant impact. Then, all the exogenous variables and intention to withdraw had a significant contribution in explaining market discipline. Contrary to the proposed hypothesis, the attitude toward withdrawal had a negative impact on market discipline. The structural model indicated that the TPB could be extended by adding some exogenous variables (i.e. Islamic financial literacy and financial risk tolerance) in determining the intention to withdraw and withdrawal behavior, which indicated the market discipline in Sharia mutual funds.
Research limitations/implications
This study was limited to individual investors who work as civil servants. This study did not accommodate different demographic factors such as age and gender, which influence fund withdrawal behavior.
Practical implications
The government must focus on the inclusion of market discipline in Sharia mutual funds’ regulation to encourage the risk management disclosure, specifically that related to Sharia compliance.
Originality/value
Previous studies applied a traditional finance theory to predict market discipline, but this study contributes to filling the theoretical gap by explaining the market discipline from a behavioral finance perspective that was found in Sharia mutual funds.
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Niket Thakker, Hitesh Kalro, Mayank Joshipura and Prashant Mishra
This study examines current dynamics, consolidates current knowledge, elicits trends, identifies and analyzes primary research clusters, and offers future research directions for…
Abstract
Purpose
This study examines current dynamics, consolidates current knowledge, elicits trends, identifies and analyzes primary research clusters, and offers future research directions for mutual fund marketing.
Design/methodology/approach
Using bibliographic information from the SCOPUS database, this study used sequential bibliometric (143 documents) and content analyses (37 documents). Bibliometric analysis aids descriptive analysis and science mapping, while content analysis facilitates identifying and analyzing research clusters and provides future research directions.
Findings
The study identifies publication trends, the most relevant authors, and journal articles and unveils the knowledge structures of the field. Analysis of bibliographic coupling reveals the following significant clusters: (1) socially responsible investing and investor preferences, (2) investor factors and traits and investment decisions; (3) external factors, mutual funds' performance and proxy information; (4) the role of disclosures and ratings in shaping investment choices, and (5) cognitive biases, information processing errors and investor behavior. Finally, it offers future research directions.
Research limitations/implications
Using different databases, bibliometric analysis tools, study periods or article screening criteria for the study might yield different results. However, this study's significant findings are robust to such alternatives.
Practical implications
This study summarizes primary clusters and identifies gaps in the current literature, which helps scholars, practitioners, regulators and policymakers understand the nuances of mutual funds marketing. Future studies may focus on the role of online and offline integration, using neuroscience for data m and contemporary investment behavior models.
Originality/value
This is the first study to apply a two-stage sequential hybrid review of articles published over the last decade in high-quality journals, enabling an analysis of the depth and breadth of mutual funds marketing research.
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The fund selection process of investors in a mutual fund needs to be understood for designing better marketing strategies. Knowledge and perception about the mutual funds can…
Abstract
Purpose
The fund selection process of investors in a mutual fund needs to be understood for designing better marketing strategies. Knowledge and perception about the mutual funds can affect investor’s behaviour towards information search and selection criteria during the decision process. Therefore, this study aims to examine Indian mutual fund investors under the framework of Theory of Planned Behaviour and consumer’s behaviour model.
Design/methodology/approach
The data have been collected from mutual fund investors in the National Capital Region–Delhi, India, through structured questionnaire. The collected data were examined with relevant statistical tools.
Findings
Knowledge and perception affect information search behaviour of the investor. Investors having better knowledge of mutual funds access impersonal sources of information and performance of fund affects their choice, whereas investors having lesser knowledge of mutual fund take advice of experts and select funds based on fund characteristics. Investors with better return perception for mutual funds ignore performance as selection criteria, whereas investors having poor risk perception tend to reduce their bias by accessing personal sources of information. Education and income of investor affect knowledge and perception of mutual funds.
Practical implications
The financial advisor-driven investors ignore performance as selection criteria and could lead to dissatisfaction later. Therefore, to make the industry investor driven, mutual funds need to focus on improving the knowledge of investors.
Originality/value
This paper shows the unique effect of knowledge and perception on information search behaviour of investors towards mutual funds. The knowledgeable investor selects mutual funds by understanding all risks and benefits.
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Jean Jinghan Chen, Xinrong Xiao and Peng Cheng
We develop our theoretical framework from the viewpoint of the information asymmetry and the agency theory that the Chinese mutual funds exhibit herd behaviour, and provide…
Abstract
We develop our theoretical framework from the viewpoint of the information asymmetry and the agency theory that the Chinese mutual funds exhibit herd behaviour, and provide empirical evidence by using cross-sectional data of all the Chinese mutual funds between 1999 and 2003. We find that the Chinese mutual funds show overall herding, buy herding and sell herding, and the degree of sell herding is higher than that of buy herding. The degree of Chinese herding is higher than their US counterpart from all the three perspectives. This may be largely due to the institutional factors rather than those firm-specific factors that influence the US mutual funds investment decision.
Fernando Muñoz, María Vargas and Ruth Vicente
This study aims to examine style-deviation practices in the socially responsible mutual funds (SMRF) industry i.e. how mutual funds game their stated financial objectives to earn…
Abstract
Purpose
This study aims to examine style-deviation practices in the socially responsible mutual funds (SMRF) industry i.e. how mutual funds game their stated financial objectives to earn a higher relative performance ranking. In addition, the consequences of such practices on sustainable scores and money flows are studied.
Design/methodology/approach
A sample of 454 US equity SRMFs is studied. This paper uses panel regressions controlling for time and style fixed-effects.
Findings
This study finds that 17.60% of SRMF managers in the sample are engaged in style deviation practices. These practices positively impact the sustainable performance of SRMFs and negatively impact their financial performance. One effect offsets the other and they consequently do not affect money flows. Another finding is that only investors with lower portfolio sustainability scores do show return-chaser behaviour.
Practical implications
This paper reveals that SRMF managers deviating from their stated financial style face a dilemma that is non-existent for their conventional peers that is style deviation practices affect financial and sustainable performance in opposing ways, whereas SRMF investor utility depends positively on both dimensions. The findings are not conclusive about the effectiveness of style deviation practices in attracting SRMF money flows.
Social implications
SRMF industry has experienced tremendous growth in the past decade. The increased competition in this industry has led managers to strive to attract investors, sometimes by relying on irregular practices that enhance their portfolio results. Regulators should consider how to avoid such perverse behaviour with a view to improving mutual funds transparency.
Originality/value
This is the first research that analyses style deviation practices and their consequences for the SRMF industry.
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The purpose of this paper is to explain what information is contained in mutual funds' trading behaviors and to try to further assess the impact on the stock market.
Abstract
Purpose
The purpose of this paper is to explain what information is contained in mutual funds' trading behaviors and to try to further assess the impact on the stock market.
Design/methodology/approach
The objective is achieved by an empirical examination using the high‐frequency intraday data. The main methods used for the research are the autoregressive conditional duration model and the UHF‐GARCH model.
Findings
This paper gives an empirical study of mutual funds' behavior on two aspects. The first aspect is the direct impact on micro variables. The results show that mutual funds changing their positions will have different influences to the spread, adding position broadens the spread, while decreasing position makes the spread narrow; behaviors of funds change the clustering characteristic of the duration. The second aspect is the impact on the relationships among micro variables. The results indicate that trading started by liquidity buyers will make volatility larger.
Research limitations/implications
This paper supposes funds as informed traders and individual investors as liquidity traders in China's stock market. If it is not true, some interpretations of empirical results would be wrong. The authors' results may help researchers to understand the information content of funds' trading behaviors in the microstructure aspect.
Originality/value
The paper is an original work, which will be interesting to scholars in market microstructure and to practitioners in the Chinese stock market. The main contributions of the paper are: the use of high‐frequency data to study funds' behaviors and combine the trading duration and investors' trading behavior to analyze the information content of trading behaviors; second, the use of 14 stock samples in the Shanghai Stock Exchange to do the empirical study, which ensures the reliability of the results.
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The purpose of this paper is to investigate whether mutual fund investors can make effective cash flow timing decisions and examine the sensitivity of these decisions to past fund…
Abstract
Purpose
The purpose of this paper is to investigate whether mutual fund investors can make effective cash flow timing decisions and examine the sensitivity of these decisions to past fund performance using cash flow data at the individual fund level.
Design/methodology/approach
This study examines performance persistence and investor timing ability of 200 domestic equity mutual funds in Taiwan between 1996 and 2009. In particular, a performance gap measuring the difference between dollar‐weighted average monthly returns and geometric average monthly returns is used to evaluate investors' timing ability.
Findings
The empirical results show that funds that have performed well (poorly) in the previous year tend to continue performing well (poorly) in the following year, and investors' timing performance is negatively related to fund performance. The results also show that investors' timing performance is significantly and negatively related to fund size, length of fund history, and momentum‐style of funds, but positively related to value‐style funds. These results suggest that mutual fund investors are loss‐averse and demonstrate return‐chasing behavior in well‐performing funds.
Originality/value
The paper contributes to the mutual fund performance literature by proposing an integrated framework that jointly tests fund performance and how it affects investors' cash flow timing decisions. Furthermore, the paper individually measures investors' timing sensitivity for the current best (worst) performance funds and consecutive two‐year best (worst) performance funds, and contributes to a growing body of research on the behavior of mutual fund investors.
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