Research and Insights Library

Mutual Fund Outperformance and Growth

Abstract

Does better performance lead to more assets? Gregg S Fisher, Philip Z. Maymin and Zakhar G. Maymin examine nearly 30,000 mutual funds to determine the effect that a fund’s outperformance relative to its peers has on the fund’s later asset size. They find that a fund that earns ten percent more than the size-weighted average of its peers in its style group in one year will on average experience an extra 5% excess asset growth in the subsequent year. The findings are robust to all types of fund styles and all fund sizes, with two exceptions: small funds of any style and very large fixed income funds.
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