The Flow - Performance Relationship: Evidence from Pakistani Mutual Funds

Abstract

we use the novel sample of Pakistani mutual funds to examine the flow performance relationship. We apply linear regression model with fixed effect on unbalanced panel data for the period of 2012 to 2018. Consistence with the existence literature using sample of US and other developed countries ,we find positive flow- performance relationship , but the prior performance do not have larger impact on subsequent fund flows. Our results also exhibit that the shape of the relationship is not linear; it’s convex like other developed countries. In other words, the past high performing funds attracts larger inflow in the next periods whereas the past low performing fund suffer from minimal out flow in the next period.

Keywords

• Flow-Performance Relationship
• Convexity
• Mutual Fund Flows