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Does institutional ownership predict mutual fund performance? An examination of undiscovered holdings within 13(f) reports

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  • Xuhui (Nick) Pan
  • Kainan Wang
  • Blerina Bela Zykaj

Abstract

We show that institutional ownership in equity mutual funds predicts fund performance. Our measure of institutional ownership in mutual funds is directly from institutions’ quarterly 13(f) filings so it provides a broader coverage of institutional investment in mutual funds than existing studies. Most institutions holding mutual funds are independent investment advisors and bank trusts who invest in mutual funds on behalf of their clients. Our results show that funds held by institutions perform better than funds not held by institutions for at least 3 years. Institutions’ informational advantage is the main driver of the outperformance of institution‐held funds.

Suggested Citation

  • Xuhui (Nick) Pan & Kainan Wang & Blerina Bela Zykaj, 2019. "Does institutional ownership predict mutual fund performance? An examination of undiscovered holdings within 13(f) reports," European Financial Management, European Financial Management Association, vol. 25(5), pages 1249-1285, November.
    • Handle: RePEc:bla:eufman:v:25:y:2019:i:5:p:1249-1285
    DOI: 10.1111/eufm.12209
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    Cited by:

    1. Chong, Terence Tai-Leung & Lee, Nayoung & Sio, Chan-Ip, 2020. "Threshold effect of scale and skill in active mutual fund management," The North American Journal of Economics and Finance, Elsevier, vol. 51(C).

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