The "Smart Money" Effect: Retail versus Institutional Mutual Funds

Research output: Other contributionpeer-review


Do sophisticated investors exhibit a stronger “smart money” effect than unsophisticated ones? In this paper, I examine whether fund selection ability of institutional mutual fund investors is better than that of retail mutual fund investors. In line with the studies of Gruber (1996), Zheng (1999), and Keswani and Stolin (2008), I find a smart money effect for investors of both institutional and retail mutual funds. Surprisingly, the results suggest that investors of institutional funds, with a higher representation of more sophisticated investors, do not demonstrate a better fund selection ability.
Original languageEnglish GB
Number of pages50
StatePublished - 2013

Publication series

NameAvailable at SSRN 2020365


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