| Summary: | This paper provides a comprehensive taxonomy of mutual funds and discusses the relative importance of these fund types. While most academic research focuses on US equity funds, we provide results for many more asset classes with this taxonomy—fixed income, balanced, global, International, sector, market-neutral and long-short funds. For each, we start by reporting statistics on the number of funds and their total net asset values at different intervals over the last four decades. We then identify short and long-term patterns in annual returns to mutual funds. We study the cross-sectional and time-series properties of the distribution of investor flows into different types of mutual funds, describe the relationship between flows and performance and discuss its implications for the strategic behaviour of managers and investors. We estimate and interpret fund performance alphas using both the single-factor and four-factor Fama-French models for each taxonomy type. Finally we describe the state of academic research on portfolio performance evaluation tilted towards an applied audience.
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