Investor flow-chasing and price–performance puzzle: Evidence from global infrastructure funds

Ruihui Xu, Xuliang Zhang, Giray Gozgor, Chi Keung Marco Lau, Cheng Yan

Research output: Contribution to journalArticlepeer-review

Abstract

Despite the importance and peculiarity of the infrastructure fund, determinants of infrastructure fund flow and the relation between fees and fund performance were poorly understood. This paper documents two new findings using a unique dataset for global infrastructure funds from January 2005 to June 2019. First, investor flow-chasing exists at the level of infrastructure fund companies, which is intensified by the opacity of information and uncertainty of returns. Second, infrastructure funds charge higher fees even when their before-fee performance is worse, which is explained by fund characteristics and year effects. Based on these findings, we put forward countermeasures from the perspectives of investors, regulators, investor protection managers, and fund managers, with incentive mechanism reforms to alleviate the price-performance puzzle, thereby improving the efficiency of infrastructure fund portfolios.

Original languageEnglish
Article number101933
JournalResearch in International Business and Finance
Volume65
DOIs
Publication statusPublished - 21 Mar 2023
Externally publishedYes

Bibliographical note

Funding Information:
We acknowledge the research support by the Major Project of the Ministry of Education of China ( 22JJD790071 ), Research Group of the Research Center for Coordinated Development, Zhejiang University ( 2022ZBKT02 ), the National Social Science Fund of China ( 16BJY052 ), the Fundamental Research Funds for the Provincial Universities of Zhejiang ( GB202002003 & GB201902002 ), the Key Project of Zhejiang Soft Science Research Program ( 2022C25015 ), the Major Humanities and Social Sciences Research Projects in Zhejiang Province ( 2021QN050 ), and the Zhejiang Provincial Natural Science Foundation of China ( LZ20G010002 ).

Publisher Copyright:
© 2023 Elsevier B.V.

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