In addition to testing for the presence of smart money, the disaggregated na- ture of our fund f low data allows us to examine two key hypotheses with respect to mutual fund investor behavior. Specifically, we are in a position to compare the quality of fund selection decisions made by individual and institutional investors, and likewise to compare fund buying and selling decisions. While in- stitutions should benefit from both better information and more sophisticated evaluation techniques, we would expect individual investors to have greater incentives to make good investment decisions given the superior alignment of their payoffs with their investment returns (Del Guercio and Tkac (2002))
