Recent empirical evidence has suggested that the Japanese mutual fund industry hasquot; underperformed dramatically over the past two decades. Conjectured reasons forquot; underperformance range from tax-dilution effects to high fees, high turnover and poor assetquot; management. In this paper,...

We find evidence that is consistent with the hypothesis that daily mutual fund flows may be instruments for investor sentiment about the stock market. We use this finding to construct a new index of investor sentiment, and validate this index using data from both the United States and Japan. In...