Mutual fund flows and gender biases in Scandinavia : empirical evidence from the mutual fund industry in Norway, Sweden and Denmark

Abstract

My empirical analyses are conducted based on a monthly survivorship-bias free sample of all single-managed equity mutual funds in Norway, Sweden and Denmark from 2005 to 2014. Using a pooled regression approach, I investigate whether Scandinavian investors chase past returns, and further whether flows are sensitive to the fund manager’s gender. To address the concern that it is impossible to empirically observe and control for all potential drivers of fund flows, the empirical analysis in the second part of my study is supplemented with an experimental investment task conducted on students at NHH. The experiment attempts to capture the effect of the fund manager’s gender on investment decisions in a “real life” setting, controlling for any confounding real world factors that might influence flows. My findings suggest that Scandinavian investors chase past performance, which is similar to findings from the U.S. They do not, however, tend to disproportionately flock around top performing funds, implying that the convexity of the flow-performance relationship, suggested by the literature, is not present in Scandinavia. This finding deviates from several studies on mutual fund flows conducted on U.S. data. However, it is in line with a worldwide study of fund flows by Ferreira, Keswani, Miguel and Ramos (2012), suggesting significant differences in the flow-performance relationship between countries. Furthermore, I find neither empirical, nor experimental, evidence of Scandinavian investors preferring male fund managers to female fund managers. Whereas a similar study from the U.S. by Niessen and Niessen-Ruenzi (2013) suggest that investment decisions are affected by gender biases, my results indicate that Scandinavian investors behave differently, and that they do not disproportionally allocate money to male-managed funds.