Changing Names with Style: Mutual Fund Name Changes and Their Effects on Fund Flows





    Search for more papers by this author
    • Cooper and Rau are with the Krannert Graduate School of Management, Purdue University. Gulen is with the Pamplin College of Business, Virginia Tech. We would like to thank Sean Collins, Diane del Guercio, Dave Denis, Diane Denis, Joost Driessen, Ken French, Zoran Ivković, Ravi Jagannathan, Mike Lemmon, Tim Loughran, John McConnell, Wanda Wallace, Russ Wermers, Jeff Wurgler, and seminar participants at the College of William and Mary, the University of Arizona, the University of Utah, Virginia Tech, the Batten Conference at the College of William and Mary, the 2003 European Finance Association meetings, the University of Illinois Conference on Bear Markets, and the 2003 Western Finance Association meetings for helpful comments. We thank Don Autore and Jim Garrett for excellent research assistant work. Comments from the editor, Rick Green, and an anonymous referee are also gratefully acknowledged.


We examine whether mutual funds change their names to take advantage of current hot investment styles, and what effects these name changes have on inflows to the funds, and to the funds' subsequent returns. We find that the year after a fund changes its name to reflect a current hot style, the fund experiences an average cumulative abnormal flow of 28%, with no improvement in performance. The increase in flows is similar across funds whose holdings match the style implied by their new name and those whose holdings do not, suggesting that investors are irrationally influenced by cosmetic effects.