Authors: Ariadna Dumitrescu and Javier Gil-Bazo

Economic Letters, Vol. 148, No 1, 17-22, November, 2016

In a model of mutual fund investor learning about managerial ability, we investigate how investment decisions depend on both past returns and non-return information. We show that non-return information affects investors’ reliance on past returns as well as their decision to participate. Our results have important consequences for the relationship between flows of money and past fund performance.