Past performance and fund flow have been identified as two of the most important factors in explaining future mutual fund performance. However, performance persistence and the smart-money effect are considered as two independent phenomena. We examine the competing abilities of past performance and fund flow in predicting future fund returns. The empirical evidence confirms performance persistence and the smart-money effect as two independent effects. A closer examination indicates that performance persistence lasts longer, whereas the smart-money effect exists only in the short run. The smart money eventually becomes dump in the long run because of a significant negative relation between pervious fund inflow and the subsequent long-term fund returns.