The Asymmetric Influence of Fund Flow on Fund Performance

This paper examines the influence of fund flow on fund performance in US domestic equity funds from 1993 to 2008. We find that fund flow has an asymmetric influence on fund performance. Inflow will significantly push up simultaneous fund performance, whereas outflow does not significantly result in negative risk-adjusted returns. We also find suggestive evidence that the outperformance of funds experiencing inflow comes from flow-driven purchase, which means that funds with inflow may expand existing positions and create positive price pressure in overlapping positions