This study analyzes how equity mutual fund investor behavior has changed over time, and the associated impact on investor returns. First, we find that from 1991-2016 investor return-chasing behavior declined and more recently disappeared, while investor flows have become more sensitive to...

We posit that institutional investors' allocation to exchange-traded funds (ETFs) is an outgrowth of inferior skill or a lack of commitment to successful active stock selection. Using institutional investors' 13F holdings, we show that ETF users — as compared to non-users — manage their...

We document a novel channel through which coordinated trading exerts externalities on financial markets. We study the impact of a financial advisory firm that recommends frequent reallocations between equity and bond funds to Chilean pension investors. The recommendations generate large and...

Return-chasing investors almost exclusively consider top-performing funds for their investment decisions. When drawing conclusions about the managerial skill of these top performers, they tend to neglect fund volatility and the cross-sectional information contained in the number of funds and the...

Reaching-for-yield — investors' propensity to buy riskier assets in order to achieve higher yields—is believed to be an important factor contributing to the credit cycle. This paper presents a detailed study of this phenomenon in the corporate bond market. We show that insurance companies,...

This paper brings together the academic literature on individual and institutional investors in order to understand the nature of difficulties faced by them and set the background for the Special Issue. This introductory article and the papers in the Special Issue contribute to the debate on how...

We examine how institutional investors trade stocks with high research and development (R&D) expenses and investigate whether they can detect value-relevant R&D. We document significant differences between hedge funds and other institutional investors in terms of their trading in high R&D...

Selecting managers on the basis of past performance is an intuitive strategy that seems trusted by investors. Indeed, many studies report a positive correlation between past fund returns and investor cash flows. Evidence also suggests that at least at shorter-term horizons investing with the top...

This paper explores the role mutual fund herding plays on the return comovement in Chinese stocks. The results show that mutual fund herding significantly reduces the return comovement among Chinese stocks, providing evidence for the existence of a rational herding behavior by mutual funds. We...

We analyze the effect of different interest rate environments on the institutional investors' preferences towards risk using data on their holdings from 13f filings. We find strong empirical evidence for the predictions Rajan (2006) on how different interest rate characteristics affect...