Dumb Money: Mutual Fund Flows and the Cross-Section of Stock Returns

  title={Dumb Money: Mutual Fund Flows and the Cross-Section of Stock Returns},
  author={A. Frazzini and O. Lamont},
  journal={NBER Working Paper Series},
  • A. Frazzini, O. Lamont
  • Published 2005
  • Business
  • NBER Working Paper Series
  • We use mutual fund flows as a measure for individual investor sentiment for different stocks, and find that high sentiment predicts low future returns at long horizons. Fund flows are dumb money %uF818 by reallocating across different mutual funds, retail investors reduce their wealth in the long run. This dumb money effect is strongly related to the value effect. High sentiment also is associated high corporate issuance, interpretable as companies increasing the supply of shares in response to… CONTINUE READING
    526 Citations


    Investor Sentiment in Japanese and U.S. Daily Mutual Fund Flows
    • 115
    • PDF
    Asset Fire Sales (and Purchases) in Equity Markets
    • 293
    • PDF
    Mutual Fund Herding and the Impact on Stock Prices
    • 1,036
    • PDF
    Mutual Fund Performance: An Empirical Decomposition into Stock-Picking Talent, Style, Transactions Costs, and Expenses
    • 1,525
    • Highly Influential
    • PDF