Does institutional ownership predict mutual fund performance? An examination of undiscovered holdings within 13(f) reports. (10th February 2019)

• Record Type: Journal Article
• Authors: Pan, Xuhui (Nick); Wang, Kainan; Zykaj, Blerina Bela
• Is Part Of: European financial management. Volume 25:Number 5(2019:Nov.)
• Page Start: 1249
• Page End: 1285
• Publication Date: 2019-02-10
• Subjects: 13(f) filings -- institutional investors -- mutual‐fund performance -- mutual funds; Finance -- European Union countries -- Periodicals; International finance -- Periodicals; Corporations -- European Union countries -- Finance -- Periodicals; 332.094
• DOI: 10.1111/eufm.12209
• Languages: English
• ISSNs: 1354-7798

Abstract

Abstract: We show that institutional ownership in equity mutual funds predicts fund performance. Our measure of institutional ownership in mutual funds is directly from institutions' quarterly 13(f) filings so it provides a broader coverage of institutional investment in mutual funds than existing studies. Most institutions holding mutual funds are independent investment advisors and bank trusts who invest in mutual funds on behalf of their clients. Our results show that funds held by institutions perform better than funds not held by institutions for at least 3 years. Institutions' informational advantage is the main driver of the outperformance of institution‐held funds.