IMF Working Papers

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

By Jorge A Chan-Lau, Li L Ong

August 1, 2005

Download PDF

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 November 24, 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:

    ---

  • DOI:

    ---

  • Issue:

    ---

  • Series:

    Working Paper No. 2005/162

  • Stock No:

    WPIEA2005162

  • ISBN:

    9781451861815

  • ISSN:

    1018-5941

You May Also Be Interested In...

Implementing Risk-Based Solvency for Insurers—Lessons from Kenya, Mexico, and South Africa

November 22, 2024

New Evidence on the US Excess Return on Foreign Portfolios

November 22, 2024

Unlocking Adaptation Finance in Emerging Market and Developing Economies

November 19, 2024

Foreign Exchange Intervention Under the Integrated Policy Framework: The Case of India

November 15, 2024