NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Do After-Tax Returns Affect Mutual Fund Inflows?

Daniel Bergstresser, James Poterba

NBER Working Paper No. 7595
Issued in March 2000
NBER Program(s):   AP   PE

This paper explores the relationship between the after-tax returns that taxable investors earn on equity mutual funds and the subsequent cash inflows to these funds. Previous studies have documented that funds with high pretax returns attract greater inflows. This paper investigates the relative predictive power of pre-tax and after-tax returns for explaining annual fund inflows. The empirical results, based on a large sample of equity mutual funds over the period 1993-1998, suggest that after-tax returns have more explanatory power than pretax returns in explaining inflows. In addition, funds with large overhangs' of unrealized capital gains experience smaller inflows, all else equal, than funds without such unrealized gains. By disaggregating net fund inflows into gross inflows and gross redemptions, the paper also provides some insight on how after-tax returns and prospective capital gain realizations affect investor behavior.

download in pdf format
   (438 K)

email paper

A non-technical summary of this paper is available in the July 2000 NBER digest.  You can sign up to receive the NBER Digest by email.

This paper is available as PDF (438 K) or via email.

Machine-readable bibliographic record - MARC, RIS, BibTeX

Document Object Identifier (DOI): 10.3386/w7595

Published: Bergstresser, Daniel and James Poterba. "Do After-Tax Returns Affect Mutual Fund Inflows?," Journal of Financial Economics, 2002, v63(3,Mar), 381-414. citation courtesy of

Users who downloaded this paper also downloaded these:
Johnson and Poterba w13884 Taxes and Mutual Fund Inflows Around Distribution Dates
Sialm and Starks w15327 Mutual Fund Tax Clienteles
Shoven, Dickson, and Sialm w7669 Tax Externalities of Equity Mutual Funds
Poterba w8340 Taxation, Risk-Taking, and Household Portfolio Behavior
 
Publications
Activities
Meetings
NBER Videos
Data
People
About

Support
National Bureau of Economic Research, 1050 Massachusetts Ave., Cambridge, MA 02138; 617-868-3900; email: info@nber.org

Contact Us