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Does institutional ownership predict mutual fund performance? An examination of undiscovered holdings within 13(f) reports
Author(s) -
Pan Xuhui Nick,
Wang Kainan,
Zykaj Blerina Bela
Publication year - 2019
Publication title -
european financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.311
H-Index - 64
eISSN - 1468-036X
pISSN - 1354-7798
DOI - 10.1111/eufm.12209
Subject(s) - mutual fund , institutional investor , fund of funds , business , closed end fund , commodity pool , equity (law) , global assets under management , open end fund , finance , passive management , accounting , financial system , corporate governance , political science , market liquidity , law
We show that institutional ownership in equity mutual funds predicts fund performance. Our measure of institutional ownership in mutual funds is directly from institutions’ quarterly 13(f) filings so it provides a broader coverage of institutional investment in mutual funds than existing studies. Most institutions holding mutual funds are independent investment advisors and bank trusts who invest in mutual funds on behalf of their clients. Our results show that funds held by institutions perform better than funds not held by institutions for at least 3 years. Institutions’ informational advantage is the main driver of the outperformance of institution‐held funds.