This paper examines the flows of funds into and out of equity mutual funds, focusing on how consumers make decisions based on past performance. It highlights that consumers disproportionately invest in funds with strong recent performance, and that search costs significantly influence fund flows. High-performing funds with higher marketing efforts (as indicated by higher fees) attract more investors, as they reduce search costs. The study also finds that fund flows are related to the size of the fund and its media attention, which lower search costs for consumers. The research uses data from 1971 to 1990, analyzing the performance, fees, and risk of mutual funds. It finds that consumers are sensitive to fund performance, with high-performing funds experiencing stronger inflows. However, the relationship is not linear, and lower-performing funds do not show a significant outflow. The study also finds that lower fees are associated with higher fund flows, and that risk is negatively related to flows. The paper discusses the role of costly search in consumer decision-making, noting that fund complexes with higher marketing efforts and media attention attract more investors. It also explores how fund performance and marketing efforts interact to influence flows. The study concludes that mechanisms that reduce search costs have a significant impact on consumer fund choices. The findings suggest that marketers and the financial press play a crucial role in directing investment flows based on past performance. The research provides insights into how individual investors make decisions and the factors that influence their choices in the mutual fund industry.This paper examines the flows of funds into and out of equity mutual funds, focusing on how consumers make decisions based on past performance. It highlights that consumers disproportionately invest in funds with strong recent performance, and that search costs significantly influence fund flows. High-performing funds with higher marketing efforts (as indicated by higher fees) attract more investors, as they reduce search costs. The study also finds that fund flows are related to the size of the fund and its media attention, which lower search costs for consumers. The research uses data from 1971 to 1990, analyzing the performance, fees, and risk of mutual funds. It finds that consumers are sensitive to fund performance, with high-performing funds experiencing stronger inflows. However, the relationship is not linear, and lower-performing funds do not show a significant outflow. The study also finds that lower fees are associated with higher fund flows, and that risk is negatively related to flows. The paper discusses the role of costly search in consumer decision-making, noting that fund complexes with higher marketing efforts and media attention attract more investors. It also explores how fund performance and marketing efforts interact to influence flows. The study concludes that mechanisms that reduce search costs have a significant impact on consumer fund choices. The findings suggest that marketers and the financial press play a crucial role in directing investment flows based on past performance. The research provides insights into how individual investors make decisions and the factors that influence their choices in the mutual fund industry.