The number of different funds holding a stock is a better predictor of its future returns than the total amount of money invested in it.
April 1, 2026
Original Paper
Abnormal Fund Holding Count and Stock Returns
SSRN · 6504474
The Takeaway
Investors usually focus on where the 'big money' is flowing. This research suggests that 'institutional breadth'—the raw headcount of different managers who find a stock attractive—is a much more accurate signal of a stock's true value and future performance in emerging markets.
From the abstract
Existing literature questions whether mutual fund holdings convey information for predicting stock returns in emerging markets. We argue that this lack of evidence stems from a methodological limitation: conventional value-weighted holding measures are dominated by a few large funds, obscuring the collective signal from numerous smaller, but potentially more informed managers. This scale-induced distortion masks the true breadth of institutional attention. To address this, we propose the Abno