Evidence on the Performance of Infrastructure Mutual Funds

Abstract

This article investigates, empirically, whether infrastructure-focused mutual funds provide superior performance (higher alphas) than comparable equity mutual funds not investing in infrastructure. Using monthly returns on US equity mutual funds, the “best clientele performance measure” developed by Chrétien and Kammoun (2017, 1583), and the generalized method of moments estimation, we find that infrastructure-focused mutual funds have higher alphas (higher best clientele alphas) than comparable funds not investing in infrastructure. Our results support the growing belief that infrastructure-focused equity mutual funds are able to provide superior performance resulting from the financial characteristics of infrastructure. Furthermore, our results show that the investor disagreement about the performance of infrastructure-focused equity mutual funds is not significantly different from that of comparable funds not investing in infrastructure.

TOPICS: Wealth management, mutual fund performance

Key Findings

• • The infrastructure-focused equity mutual funds have higher alphas (higher best clientele alphas) than comparable funds not investing in infrastructure.

• • The investor disagreement about the performance of infrastructure-focused equity mutual funds is not significantly different from that of comparable funds not investing in infrastructure.

• • Our results support the growing belief about the superior performance of infrastructure-focused equity mutual funds resulting from the financial characteristics of infrastructure.