Performance Chasing, Fund Flows and Fund Size in Real Estate Mutual Funds

Posted: 3 Oct 2014

See all articles by Julia Chou

Julia Chou

Florida International University

William G. Hardin

Florida International University (FIU) - College of Business Administration

Date Written: October 2, 2014

Abstract

Real estate mutual funds have grown dramatically in number, size, scope and assets under management over the last 15 years, but little assessment is evident. The present study addresses this limitation. Better prior period performance is associated with greater shares of fund inflows for a period. Returns, however, are negatively associated with increased fund flows and fund size. Investors chase past performance limiting fund managers' ability to optimize investments. Under normal market conditions, but departing from typical mutual fund performance, real estate mutual fund returns generally exceed relevant benchmarks on a before expenses basis and match benchmark returns after expenses. The ability to meet and exceed benchmark returns, however, does not hold during the financial crisis period. Overall, more established funds are shown to have higher returns while fund turnover is not a determinants of returns.

Keywords: Mutual funds; Performance; Real estate; REITs; Fund flows; Investors

Suggested Citation

Chou, Wen-Hsiu and Hardin, William G., Performance Chasing, Fund Flows and Fund Size in Real Estate Mutual Funds (October 2, 2014). Journal of Real Estate Finance and Economics, Vol. 49, No. 3, 2014, Available at SSRN: https://ssrn.com/abstract=2504669

Wen-Hsiu Chou

Florida International University ( email )

University Park
11200 SW 8th Street
Miami, FL 33199
United States

William G. Hardin (Contact Author)

Florida International University (FIU) - College of Business Administration ( email )

Miami, FL 33199
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Abstract Views
381
PlumX Metrics