TY  - JOUR
AU  - Bergstresser,Daniel
AU  - Poterba,James
TI  - Do After-Tax Returns Affect Mutual Fund Inflows?
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 7595
PY  - 2000
Y2  - March 2000
UR  - http://www.nber.org/papers/w7595
L1  - http://www.nber.org/papers/w7595.pdf
N1  - Author contact info:
Daniel Bergstresser
Brandeis University
International Business School 
415 South St
Waltham, MA 02453
E-Mail: dberg@brandeis.edu

James M. Poterba
Department of Economics
MIT, E52-350
50 Memorial Drive
Cambridge, MA  02142-1347
Tel: 617/253-6673
Fax: 617/258-7804
E-Mail: poterba@nber.org
AB  - 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.
ER  -