Stretching fund family and manager reputation: Evidence from china

This paper examines the role of stretching mutual fund families and manager reputation in China using the new fund issuing data from 2004 to 2010. We find that managers with higher reputation attract more fund inflows to new funds, with four months spill-over effect to seasoned funds. Meanwhile, past performance of prestigious managers can persist in new funds, and performance of new funds run by managers with reputation is better than those run by managers without reputation. For fund families, stretching is effective by increasing fund inflows. For investors, investing in new funds run by star managers can improve one-year return performance.