Determinants of money flows into investment trusts in Japan

The primary determinant of future net fund flows is the fund's current raw return, which by itself can explain a large proportion of the variation in net fund flow. Hence, our model's estimates of future fund flows would be of practical use to investment managers when planning asset purchases and managing cash reserves. Interestingly, we find that if a fund is part of a large financial group then its fund flow is more sensitive to its performance.