Romanian Mutual Funds Flows-performance Relationship

Abstract Mutual funds have become increasingly attractive for Romanian investors despite of the critical financial environment caused by the recent crisis. Studies on risk-adjusted performance show that regardless of the amazing explosion in total assets most of these entities don’t add value and are unable to generate superior risk-adjusted returns. Using panel data methodology this paper tries to assess the relationship between past performance, market size and equity fund flows and finds evidence that past performance has a significant positive influence on the current capital flow of Romanian equity funds.