Investor sentiment and mutual fund stock picking

ORCID Identifiers

0000-0002-1989-7087

Document Type

Article

Source of Publication

Applied Economics Letters

Publication Date

7-13-2021

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.

ISSN

1466-4291

Publisher

Taylor & Francis

Disciplines

Business

Keywords

Mutual fund, Stock picking, Active share, Investor sentiment, Stock return

Indexed in Scopus

no

Open Access

no

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