SSRN Electronic Journal · 2000 · 314 citations · 0 references
BusinessEconomicsFinanceFinancial EconomicsInvestment ManagementPortfolio ManagementActive Portfolio ManagementAsset AllocationInvestmentInvestment FundsMutual Fund ManagementMutual FundsActive Fund ManagementActive Investment ManagementActively Managed FundsFund Manager SelectionMutual Fund Manager BehaviorMutual Fund Performance EvaluationValuation Of Growth Stocks
The study investigates the value of active mutual fund management by analyzing the stockholdings and trades of mutual funds. The authors examine fund holdings and trading activity to assess active management performance. Stocks widely held by funds do not outperform other stocks, but those purchased by funds yield significantly higher returns than those sold, growth‑oriented funds outperform income‑oriented ones, and past performance provides only weak evidence of superior stock‑picking skill.
We investigate the value of active mutual fund management by examining the stockhold? ings and trades of mutual funds. We find that stocks widely held by funds do not outper? form other stocks. However, stocks purchased by funds have significantly higher returns than stocks they sell?this is true for large stocks as well as small stocks, and for value stocks as well as growth stocks. We find that growth-oriented funds exhibit better stock selection skills than income-oriented funds. Finally, we find only weak evidence that funds with the best past performance have better stock-picking skills than funds with the worst past performance.