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Mutual Fund Herding in Industries: The Turkish Case

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  • Onur Tekel
  • İlkay Şendeniz-Yüncü

Abstract

This study investigates the industry herding of mutual funds traded in Turkey and the effects of industry herding on industry valuations. Using a sample of monthly portfolio holdings of 37 equity-intensive mutual funds traded in Borsa Istanbul (BIST), we employ the LSV and Sias herding measures. We find significant industry herding with the LSV measure and no overall industry herding with the Sias measure. We show that fund flows of underlying investors, individual stock herding, and the investing style of the mutual funds are not relevant drivers of industry herding. Furthermore, we document that industry herding is not a factor that destabilizes industry returns. These findings are especially crucial for investors who trade in concentrated markets since they raise questions regarding aspects such as the lower number of investors and stocks, as well as the information content of industry components, which have been claimed to have an impact on herding behavior in such a setting.

Suggested Citation

  • Onur Tekel & İlkay Şendeniz-Yüncü, 2024. "Mutual Fund Herding in Industries: The Turkish Case," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 60(12), pages 2850-2867, September.
    • Handle: RePEc:mes:emfitr:v:60:y:2024:i:12:p:2850-2867
    DOI: 10.1080/1540496X.2024.2331007
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