The major participants of world stock markets are mutual investment
funds. The flow of private savings into those funds provides for the increase
of capital markets liquidity. However, the question arises whether market
stability decreases along with in- or outflows to or from equity mutual funds.
The industry of pooled investments in Russia has stabilized after
explosive growth in early and mid- 2000s. The relative combined asset value of Russia’s
funds remain at a substantially lower level compared to developed countries,
BRIC and Eastern European countries. This difference cannot be explained by the
immaturity of Russian capital market since many of Eastern European capital
markets also appeared in last 20 years. One of the reasons negatively impacting
the attitude towards the Russia’s
capital market in general and equities mutual funds as the easiest mean for
personal investments in particular can be high stock market volatility.
In order to address these questions this study tests hypotheses of
bilateral effect of stock market
indicators and fund flows.