Investigating the Relationship between Mutual Funds Flows and the Stock Index in Tehran Stock Market

The purpose of this study is to investigate the relationship between the mutual funds flows and the return of stock index using 65 mutual funds in the period of 2008 to 2011. In this study، the daily changes of the total number of units of mutual funds and the changes of the total values of units of mutual funds were considered as a criteria for the net of mutual funds flows. The results of Johansen test show that the series are integrated and there is a significant relationship between the total net of mutual funds flows and the index of Tehran stock market in a long term period. After running theGranger causality test، the results indicated that there is a mutual causal relationship between the total number of units of mutual funds and the index. The same relationship is seen between the changes of total values of units of mutual funds and the index.