How Investors Trip Themselves Up
Parent trap. A third study found that investors put more money into mutual funds when the share price of the fund’s parent company is outperforming the market than they put into mutual funds run by companies whose share prices are lagging behind.
For most of the companies in the study, running mutual funds was a relatively minor source of revenue. That suggests that the inflow of investor money wasn’t driving the parent company’s share price, according to Clemens Sialm, a professor at the University of Texas at Austin who co-wrote the study—which also included fund firms such as T. Rowe Price Group and Janus Capital Group.
The study, which didn’t include companies whose shares aren’t publicly traded, such as Vanguard Group and Fidelity Investments, is due to be published in Management Science, another peer-reviewed journal.
