The Journal of Finance publishes leading research across all the major fields of finance. It is one of the most widely cited journals in academic finance, and in all of economics. Each of the six issues per year reaches over 8,000 academics, finance professionals, libraries, and government and financial institutions around the world. The journal is the official publication of The American Finance Association, the premier academic organization devoted to the study and promotion of knowledge about financial economics.
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Another Puzzle: The Growth in Actively Managed Mutual Funds
Published: 07/01/1996 | DOI: 10.1111/j.1540-6261.1996.tb02707.x
MARTIN J. GRUBER
Mutual funds represent one of the fastest growing type of financial intermediary in the American economy. The question remains as to why mutual funds and in particular actively managed mutual funds have grown so fast, when their performance on average has been inferior to that of index funds. One possible explanation of why investors buy actively managed open end funds lies in the fact that they are bought and sold at net asset value, and thus management ability may not be priced. If management ability exists and it is not included in the price of open end funds, then performance should be predictable. If performance is predictable and at least some investors are aware of this, then cash flows into and out of funds should be predictable by the very same metrics that predict performance. Finally, if predictors exist and at least some investors act on these predictors in investing in mutual funds, the return on new cash flows should be better than the average return for all investors in these funds. This article presents empirical evidence on all of these issues and shows that investors in actively managed mutual funds may have been more rational than we have assumed.
DETERMINANTS OF COMMON STOCK PRICES*
Published: 12/01/1966 | DOI: 10.1111/j.1540-6261.1966.tb00282.x
Martin Jay Gruber
REPLY
Published: 12/01/1968 | DOI: 10.1111/j.1540-6261.1968.tb00327.x
Edwin Elton, Martin Gruber
A Note from the Editors
Published: 09/01/1983 | DOI: 10.1111/j.1540-6261.1983.tb02309.x
Edwin J. Elton, Martin J. Gruber
BANKRUPTCY COSTS: SOME EVIDENCE
Published: 05/01/1977 | DOI: 10.1111/j.1540-6261.1977.tb03274.x
Martin J. Gruber, Jerold B. Warner