Purchase and Redemption Decisions of Mutual Fund Investors and the Role of Fund Families

This paper investigates the purchases and redemptions of a large cross-sectionalsample of German equity funds. We find that investors punish bad performance byselling their shares, but also have a tendency to sell winners. Investors in large fundfamilies show higher sales and redemption rates. Further family size also affects theflow-performance relationship: Investors in large families punish bad performancemore. Last, we find that inner family rankings play an important part for redemptions,with investors strongly redeeming their shares from intra-family losers.