Information Diffusion among International Fund Managers: Multicountry Evidence

J.T. Parwada, Joey Yang

Research output: Contribution to journalArticle

5 Citations (Scopus)

Abstract

Investors seeking exposure to global equity markets commonly buy international mutual funds managed by locally based fund managers. How competitive is this form of intermediated investing? We investigate whether international equity fund managers mimic each other's portfolio holdings and analyze the performance implications of these actions. Managers based in the same country have more stocks held in common than those of their peers in other countries. Correlated trading among domestic fund managers contributes significantly to this pattern. Cross-border managers' portfolio holdings and trades are also relevant to the actions of domestic managers. Stock selection strategies based on mimicry and differentiation both deliver short-term superior performance. Mimicked sales occur while prices are rising.
Original languageEnglish
Pages (from-to)817-835
JournalFinancial Management
Volume38
Issue number4
DOIs
Publication statusPublished - 2009

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