Fund Names vs. Family Names: Implications for Mutual Fund Flows

Abstract

An emerging literature has shown that investors are sensitive to mutual fund names. Using a sample of US equity funds over the period 1993-2017, we provide evidence that funds with a name closer to the family’s name attract more flows and display a stronger performance-flow relationship. We also find that retail investors, in comparison to institutional investors, are more affected by this name bias. Our results are in line with the literature on social biases and costly searches and show that seemingly innocuous differences in fund attributes – such as fund names – translate into significant differences in investor decisions.