TY - JOUR
T1 - Exploring style herding by mutual funds
AU - Santi, Caterina
AU - Zwinkels, Remco C.J.
N1 - Publisher Copyright:
© 2023 The Author(s)
PY - 2023/6
Y1 - 2023/6
N2 - We study intentional herding in investment styles by mutual funds, and its consequences. We find that style herding is significant and persistent. Herding tends to increase after periods of high market volatility and decrease with sentiment, consistent with the intentional character of herding. Furthermore, we find that herding is related to changes in market dynamics. Finally, we find that herding in certain styles tends to temporarily increase mutual funds’ performance, whereas it reduces flows. Overall, the results illustrate that intentional herding in styles is prevalent and has important consequences for market dynamics, fund managers, and investors.
AB - We study intentional herding in investment styles by mutual funds, and its consequences. We find that style herding is significant and persistent. Herding tends to increase after periods of high market volatility and decrease with sentiment, consistent with the intentional character of herding. Furthermore, we find that herding is related to changes in market dynamics. Finally, we find that herding in certain styles tends to temporarily increase mutual funds’ performance, whereas it reduces flows. Overall, the results illustrate that intentional herding in styles is prevalent and has important consequences for market dynamics, fund managers, and investors.
KW - Asset pricing
KW - Herding
KW - Mutual funds
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U2 - 10.1016/j.intfin.2023.101762
DO - 10.1016/j.intfin.2023.101762
M3 - Article
AN - SCOPUS:85151019574
SN - 1042-4431
VL - 85
SP - 1
EP - 21
JO - Journal of International Financial Markets, Institutions & Money
JF - Journal of International Financial Markets, Institutions & Money
M1 - 101762
ER -