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

August 1, 2005

Preview Citation

Format: Chicago

Jorge A Chan-Lau, and Li L Ong. U.S. Mutual Fund Retail Investors in International Equity Markets: Is the Tail Wagging the Dog?, (USA: International Monetary Fund, 2005) accessed October 6, 2024

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.

Subject: Emerging and frontier financial markets, Financial institutions, Financial markets, Money markets, Mutual funds, Stock markets, Stocks

Keywords: Allocation behavior, Asia and Pacific, Crossover funds, Dedicated funds, Emerging and frontier financial markets, Emerging market, Emerging market capitalization, Emerging market equity funds, Emerging market securities, Emerging markets equities, Equities return, Equity fund, Equity fund investor, Equity markets, Europe, Fund, Global, Investor allocation behavior, Investor class, Japan equities, Money markets, Mutual funds, Retail investors, Stock markets, Stocks, U.S. dollar, United States money markets, WP

Publication Details

Pages:

22
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2005/162
Stock No:

WPIEA2005162
ISBN:

9781451861815
ISSN:

1018-5941

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