Abstract Since Markowitz (1952) proposed modern portfolio theory to evaluate the correlation between investment returns and risk, a portfolio constructed by securities (mainly stocks and bonds) is called¡¨ security portfolio¡¨, which becomes popular and recognized to the financial market. Mutual funds are one of the security portfolios managed by investment professionals. To maximize the portfolio return by choosing a combination of stocks and bonds, to decide an adequate investment philosophy, strategy, process and asset reallocation, are key elements of obtaining considerable returns with limited risk and main standard of manifesting the quality and capability of fund managers. The past performance of funds is publicly available, which is scrutinized to decide what to purchase or redeem. Many studies about evaluation of portfolio performance focus on fund performance. Nevertheless recent researches focus on fund flows instead. In this study, we will examine variables that influence flows of open-ended equity mutual funds in Taiwan and have a better understanding of investor behaviors of purchasing or redeeming. We first identify variables that influence fund flows and then employee those to analyze the influence in between. We discovered that the investors are more zealous in chasing previous winners based on the short-term performance, approximately 3 to 6 months. However, once the performance of the invested fund improves for the past 12 months they trend to redeem shares to realize profit. Furthermore, they review risk before making the decision, but ignore it after investment. Investors incline to buy or sell funds of high £] and are more susceptible to related expenses and react negatively to funds that require high expense. Investors are significantly willing to invest funds that are actively traded.