We build a model of mutual fund competition in which a fraction of investors, unsophisticated, exhibit a preference for familiarity, while sophisticated investors are free of familiarity bias. Funds differ in two dimensions: quality and familiarity. Unsophisticated investors exhibit varying...

Using data on Spanish mutual funds, we show that bank-affiliated funds provide funding support to their parent company via purchases of bonds in the primary market. Funding from affiliated funds increases when it is most valuable, i.e., in times of financial stress and to riskier banks with...

Identifying outperforming mutual funds ex-ante is a notoriously difficult task. We use machine learning to exploit fund characteristics and construct portfolios of equity funds that earn positive and significant out-of-sample alpha net of all costs. In contrast, alphas of portfolios selected...