Mutual fund shareholder letters: flows, performance, and managerial behavior

Hillert, Alexander ; Niessen-Ruenzi, Alexandra ; Ruenzi, Stefan

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Document Type: Working paper
Year of publication: 2023
The title of a journal, publication series: SAFE Working Paper
Volume: 380
Place of publication: Frankfurt am Main
Publishing house: University of Frankfurt
Edition: January 2023
Publication language: English
Institution: Business School > Internat. Finanzierung (Ruenzi 2009-)
Subject: 300 Social sciences, sociology, anthropology
330 Economics
Keywords (English): Fund Flows, Textual Analysis, Shareholder Letters, Investment Styles
Abstract: Fund companies regularly send shareholder letters to their investors. We use textual analysis to investigate whether these letters’ writing style influences fund flows and whether it predicts performance and investment styles. Fund investors react to the tone and content of shareholder letters: A less negative tone leads to higher net flows. Thus, fund companies can use shareholder letters as a tactical instrument to influence flows. However, at the same time, a dishonest communication that is not consistent with the fund’s actual performance decreases flows. A positive writing style predicts higher idiosyncratic risk as well as more style bets, while there is no consistent predictive power for future performance.

Dieser Eintrag ist Teil der Universitätsbibliographie.

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