Economic Conditions, Flight-to-Quality and Mutual Fund Flow

@inproceedings{Chalmers2010EconomicCF,
  title={Economic Conditions, Flight-to-Quality and Mutual Fund Flow},
  author={John Chalmers and Aditya Kaul and Blake Phillips},
  year={2010}
}
We study the effects of economic conditions and destabilizing events on the aggregate asset allocations of mutual fund investors. In the universe of U.S. mutual funds between 1991 and 2008, we find that excess flow is consistently related to proxies for economic conditions. An expected improvement in economic conditions causes investors to direct flow away from relatively safe money market funds and towards riskier equity funds. Around major crises, we find evidence of flight-to-quality, that… CONTINUE READING

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