Investor sentiment and mutual fund stock picking

Timothy K. Chue; G. Mujtaba Mian

doi:10.1080/13504851.2021.1951440

Investor sentiment and mutual fund stock picking

Timothy K. Chue
, G. Mujtaba Mian

Research output: Journal article publication › Journal article › Academic research › peer-review

2 Citations (Scopus)

Abstract

The active share of mutual funds drops significantly when investor sentiment is high, indicating that fund managers reduce their active stock selection and stay closer to their benchmarks during such periods. Our evidence is consistent with fund managers being sentiment-prone–challenging the conventional view that it is only the preponderance of retail investors during high sentiment periods that allows sentiment to influence asset prices.

Original language	English
Pages (from-to)	1620-1625
Number of pages	6
Journal	Applied Economics Letters
Volume	29
Issue number	17
Early online date	13 Jul 2021
DOIs	https://doi.org/10.1080/13504851.2021.1951440
Publication status	Published - Oct 2022

Keywords

active share
investor sentiment
Mutual fund
stock picking
stock return

ASJC Scopus subject areas

Economics and Econometrics

More information

10.1080/13504851.2021.1951440

Cite this

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title = "Investor sentiment and mutual fund stock picking",

abstract = "The active share of mutual funds drops significantly when investor sentiment is high, indicating that fund managers reduce their active stock selection and stay closer to their benchmarks during such periods. Our evidence is consistent with fund managers being sentiment-prone–challenging the conventional view that it is only the preponderance of retail investors during high sentiment periods that allows sentiment to influence asset prices.",

keywords = "active share, investor sentiment, Mutual fund, stock picking, stock return",

author = "Chue, \{Timothy K.\} and Mian, \{G. Mujtaba\}",

note = "Funding Information: This work was supported by the Research Grants Council, University Grants Committee [15501017]. We thank an anonymous referee, Allaudeen Hameed, Chuan Yang Hwang, Marcin Kacperczyk, and Kalok Chan for helpful comments, Manhong Chan for able research assistance, and the General Research Fund of the Research Grants Council of the Hong Kong Special Administrative Region, China (Project No. 15501017) for research support. Funding Information: We thank an anonymous referee, Allaudeen Hameed, Chuan Yang Hwang, Marcin Kacperczyk, and Kalok Chan for helpful comments, Manhong Chan for able research assistance, and the General Research Fund of the Research Grants Council of the Hong Kong Special Administrative Region, China (Project No. 15501017) for research support. Publisher Copyright: {\textcopyright} 2021 Informa UK Limited, trading as Taylor \& Francis Group.",

year = "2022",

month = oct,

doi = "10.1080/13504851.2021.1951440",

language = "English",

volume = "29",

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PY - 2022/10

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N2 - The active share of mutual funds drops significantly when investor sentiment is high, indicating that fund managers reduce their active stock selection and stay closer to their benchmarks during such periods. Our evidence is consistent with fund managers being sentiment-prone–challenging the conventional view that it is only the preponderance of retail investors during high sentiment periods that allows sentiment to influence asset prices.

AB - The active share of mutual funds drops significantly when investor sentiment is high, indicating that fund managers reduce their active stock selection and stay closer to their benchmarks during such periods. Our evidence is consistent with fund managers being sentiment-prone–challenging the conventional view that it is only the preponderance of retail investors during high sentiment periods that allows sentiment to influence asset prices.

KW - active share

KW - investor sentiment

KW - Mutual fund

KW - stock picking

KW - stock return

UR - https://www.scopus.com/pages/publications/85137994888

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DO - 10.1080/13504851.2021.1951440

M3 - Journal article

AN - SCOPUS:85137994888

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ER -

Investor sentiment and mutual fund stock picking

Abstract

Keywords

ASJC Scopus subject areas

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