AllAboutAlpha.com picked up on findings from a study that claims to provide a "first direct evidence of the existence of a trade-off between performance and marketing in the asset management industry."

The study, by Massimo Massa and Yijay Yadav of INSEAD, looked at the holdings of nearly 1,000 mutual funds to find out whether they are biased toward or against stock market darlings.

They found that mutual funds shied away from low sentiment stocks and gravitated toward the stock market darlings.

A fund that stocks up on high-sentiment stocks "at the very moment in which the market displays a high degree of sentiment is more likely to capture investor attention," the researchers wrote.

Funds "deliberately sacrifice performance in order to have a portfolio composition that attracts investors…Our findings provide a first direct evidence of the existence of a trade-off between performance and marketing in the asset management industry and first evidence on how the industry prefers the latter to the former," wrote Massa and Yadav. 

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