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The Performance of Local versus Foreign Mutual Fund Managers
Author(s) -
Otten Rogér,
Bams Dennis
Publication year - 2007
Publication title -
european financial management
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.311
H-Index - 64
eISSN - 1468-036X
pISSN - 1354-7798
DOI - 10.1111/j.1468-036x.2007.00379.x
Subject(s) - fund of funds , business , closed end fund , open end fund , equity (law) , passive management , global assets under management , income fund , private equity fund , finance , mutual fund , institutional investor , investment management , stable value fund , private equity , corporate governance , market liquidity , political science , law
Abstract In this paper we examine the performance of US equity funds (locals) versus UK equity funds (foreigners) also investing in the US equity market. Based on informational disadvantages one would expect the UK funds to under‐perform the US funds, especially in the research‐intensive small company market. After controlling for tax treatment, fund objectives, investment style and time‐variation in betas, we do not find evidence for this. In the small company segment we even find a slight out‐performance for UK funds compared to US funds. Finally we observe a home bias in the UK portfolios, which is partly attributable to UK funds investing in cross‐listed stocks in the USA.