The Effects of Advertising on Mutual Fund Flows: Results from a New Database


  • We are grateful to Competitrack for providing the advertising data and to the seminar participants at Binghamton University, the 2006 Midwest Finance Association, the 2006 Financial Management Association meetings, and an anonymous referee.


We examine 471,000 mutual fund company advertisements from 1997 to 2003 to study advertising's effect on fund inflows. We find advertising is generally ineffective in attracting inflows but was more effective during the bear market despite smaller advertising expenditures during this time. The top 10 advertisers in our sample were most successful in capturing inflows. These companies generated inflows with mutual fund ads; other companies succeeded when advertising their other products and their brand image. Within a fund family, advertising affects the flagship fund differently than the other funds. Sample firms appeared unable to choose correctly between print and TV ads.