Mutual fund shareholder letters: Flows, performance, and managerial behavior

Arbeitspapier

Fund companies regularly send shareholder letters to their investors. We use textual analysis to investigate whether these letters' writing style influences fund flows and whether it predicts performance and investment styles. Fund investors react to the tone and content of shareholder letters: A less negative tone leads to higher netflows. Thus, fund companies can use shareholder letters as a tactical instrument to influence flows. However, at the same time, a dishonest communication that is not consistent with the fund's actual performance decreases flows. A positive writing style predicts higher idiosyncratic risk as well as more style bets, while there is no consistent predictive power for future performance.

Object Details

• Language: Englisch

References and Relationships

• Bibliographic citation: Series: SAFE Working Paper ; No. 380

Classification and Topics

• Classification: Wirtschaft ; Pension Funds; Non-bank Financial Institutions; Financial Instruments; Institutional Investors ; Portfolio Choice; Investment Decisions
• Subject: Fund Flows ; Textual Analysis ; Shareholder Letters ; Investment Styles

Contributors, Places and Time

• Event: Geistige Schöpfung
• (who): Hillert, Alexander ; Niessen-Ruenzi, Alexandra ; Ruenzi, Stefan
• Event: Veröffentlichung
• (who): Leibniz Institute for Financial Research SAFE
• (where): Frankfurt a. M.
• (when): 2023

Further information

• Handle: http://hdl.handle.net/10419/268607
• Last update: 10.03.2025, 11:42 AM CET