We study how mutual fund managers update beliefs and whether such updating reflects managerial skill. Using regulator-mandated, forward-looking investment outlook disclosures from Chinese mutual funds, we construct a novel measure of belief updating intensity based on year-over-year changes in stated beliefs, and further decompose these updates into macro and micro themes. We show that belief updating is strongly state contingent. During recessions, funds with more intensive updating shift their outlooks toward macroeconomic conditions, reduce procyclical stock exposures, and scale back on-site company visits, while the opposite pattern emerges in expansions. Belief-updating intensity positively predicts future performance, and this payoff is strongest when managers reweight beliefs in ways that align with prevailing economic conditions, indicating that belief updating captures an ex ante dimension of managerial skill. Consistent with a signaling interpretation, investors allocate more capital to funds with stronger belief updating, particularly when past returns are less informative.

Chinese mutual fund managers are required to file quarterly commentaries that mix fund-specific performance/strategy discussions with broader macroeconomic commentary, alongside financial statements. Using FinBERT Model, we decompose these narratives into substantive discussions (fund-specific) and general discussions (macro) and measure strategic messaging by the relative tone of substantive discussions to general discussions. We then analyze how such strategic narratives affect investor behavior. We posit two channels through which relative tone could affect subsequent fund flows: information revelation or strategic tone management. Using 64,810 fund-quarter observations (2008–2022), we find that a one-standard-deviation increase in optimistic relative tone predicts a 0.98% rise in subsequent fund flows—about 25.36% of the effect of prior-quarter performance. Results hold in difference-in-difference analyses, using fund manager-turnover as identification. The flow effect is stronger for funds with superior past performance and for senior managers, but is weaker when investors are distracted. Relative tone does not predict future fund returns on average, although star managers’ relative tone carries some predictive content. Overall, our evidence is consistent with coexistence of information revelation and strategic tone management.

Do investors respond to what fund managers say, or how they look saying it? Using 2,000 live-streamed sessions by Chinese ETF managers and multimodal machine learning, we show that managers’ facial expressions, not their words, drive fund flows. A one-standard-deviation increase in positive facial affect raises next-day flows by 0.17pp (260% of mean). Vocal tone shows weak effects; textual sentiment shows none. Critically, facial expressions predict flows but not returns, indicating pure persuasion rather than information transmission. Effects strengthen when investors are emotionally vulnerable (down markets, retail-heavy funds) and persist 2-3 weeks before dissipating. Our findings challenge the emphasis on textual disclosure in finance and raise questions about investor protection as video communication proliferates.

This paper examines whether mandatory ownership disclosure aligns incentives or distorts in-vestor beliefs. Using a sample of 1,436 Chinese equity-oriented mutual funds from 2012 to 2023,we find that higher managerial and senior ownership are significantly associated with larger in-flows, suggesting that investors treat ownership as a quality signal. However, we find no evidencethat ownership forecasts superior future returns or risk-adjusted alphas. Mechanism tests showthat the ownership-flow effect is much stronger in low-marketing funds and that managers increaseownership after weak flows, a countercyclical pattern inconsistent with overconfidence and consis-tent with strategic remedial signaling. Overall, ownership disclosure appears to operate primarilythrough investor perception rather than information about managerial ability, weakening the linkbetween capital allocation and true skill in the mutual fund industry.

We study the influence of investor attention on mutual fund investors' fund selection and fund managers' portfolio choice. Using the Google Search Volume Index to measure investor attention on individual stocks, we find fund investors tend to direct more capital to mutual funds holding more high-attention stocks; fund managers tend to perform window-dressing trading to increase the portfolio holdings of high-attention stocks displayed to investors. Our results suggest that funds, particularly those with strong incentives, strategically trade on stock attention to attract investor flows. This strategic trading behaviour is also associated with fund underperformance and leads to larger non-fundamental volatility of holding stocks.

This study explores how Chinese mutual fund managers’ degrees of disagreement (DOD) on stock market returns affect investor capital allocation decisions using a novel text-based measure of expectations in fund disclosures. In the time series, the DOD neg-atively predicts market returns. Cross-sectional results show that investors correctly perceive the DOD as an overpricing signal and discount fund performance accordingly. Flow-performance sensitivity (FPS) is diminished during high dispersion periods. The ef-fect is stronger for outperforming funds and funds with substantial investments in bubble and high-beta stocks, but weaker for skilled funds. We also discuss ffnancial sophisti-cation of investors and provide evidence that our results are not contingent upon such sophistication.

We examine global integration in the market for asset management, as indicated by the correlation of mutual fund flows across domiciles. We observe no leading role for the US relative to flows in other domiciles. We do observe a strong global factor in MF flows, and global integration is linked to a market’s business environment, safety from conflict, and political stability. In regional analysis, Europe represents an integrated market for asset management, led by Luxembourg, where asset managers face common flow risks across domiciles. The Asia-Pacific region displays no coherent patterns of correlations across domiciles.