U.S. Mutual Fund Retail Investors in International Equity Markets: Is the Tail Wagging the Dog?

 
Author/Editor: Chan-Lau, Jorge A. ; Ong, Li L.
 
Publication Date: August 01, 2005
 
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
 
Summary: Do the dynamics of net flows to U.S. retail mutual funds affect equity returns in emerging markets? The question merits further examination since retail investors in mutual funds can exert a much greater degree of "control" over these funds via cash injections or redemptions at any time. A VAR analysis shows increased discrimination across emerging market regions after the Asian crisis as investors focused on individual regions rather than on emerging markets as a generic asset class. Crossover funds allocations also appear to affect emerging market returns. Furthermore, investment decisions by fund managers seem to be largely driven by retail investor allocations.
 
Series: Working Paper No. 05/162
Subject(s): Capital flows | Emerging markets | Investment policy | Stock markets | United States

Author's Keyword(s): Mutual funds | retail investors | equity markets | dedicated funds | crossover funds
 
English
Publication Date: August 01, 2005
ISBN/ISSN: 1934-7073 Format: Paper
Stock No: WPIEA2005162 Pages: 22
Price:
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