This study employs a trading dataset from a top investment bank in Taiwan to examine whether and how mutual fund advertising influences fund consumers’ redemption behavior, and whether the effect of advertising differs between small- and large-amount fund consumers. The evidence of this study shows that, on average, fund consumers redeem more non-advertised funds as their returns increase, while fund advertising slows their redemptions. The results from quantile regression show that fund advertising plays an important role in affecting redemption-performance sensitivity of large-amount and medium-amount investors. After taking advertising into account, large-amount and medium-amount investors reduce their fund redemptions. The results suggest that advertising, as a transmission of information, varies with investors’ wealth levels and that these differences in advertising matter to investors’ redemptions. This study contributes to understanding the role of advertising in fund consumers’ realized behavior and is useful for fund companies because they can more efficiently allocate limited resources such as advertising to support the growth of fund assets under management.

• Kuan-Ling Lai(National Sun Yat-sen University)
• Miao-Ling Chen(National Sun Yat-sen University)
• Chi-Lu Peng(Chung Hua University)