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Mutual Fund Trades: Asymmetric Liquidity Preferences and Fund Performance

Clarke, Alex; Cullen, Grant; Gasbarro, Domenico


We investigate the role of the liquidity of stocks traded by mutual funds on the performance of funds experiencing substantial and sustained redemptions (outflows) or inflows. Accordingly, we identify 770 redeeming fund-periods and 1,757 inflow fund-periods and find a statistically significant relation between the liquidity of the stocks they trade and the quantity of the stock traded. Notably, when funds experience redemptions, those with low portfolio liquidity have an elevated preference for...[Show more]

CollectionsANU Research Publications
Date published: 2007
Type: Journal article
Source: Journal of Financial Research
DOI: 10.1111/j.1475-6803.2007.00226.x


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