The Role of Mature Market Mutual Funds in Emerging Markets: Myth or Mayhem?

July 1, 2004

Preview Citation

Format: Chicago

Amadou N Sy, and Li L Ong. The Role of Mature Market Mutual Funds in Emerging Markets: Myth or Mayhem?, (USA: International Monetary Fund, 2004) accessed November 21, 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

The expansion of the global mutual funds industry has been characterized by growth in mature as well as emerging markets. This has clearly contributed to the development of local securities markets in emerging market economies, which in turn, has been key in attracting investment inflows from overseas funds. A major concern, however, is that large foreign investors could significantly disrupt the stability of local capital markets in the event of a market shock, with systemic implications for the real economy. Our estimates suggest that while local investors remain the more important group in terms of market share, the influence of foreign funds cannot be discounted. Asset allocation decisions by mature market funds- both dedicated and crossover-in aggregate, could affect emerging markets. In particular, European mutual funds appear to play a much bigger role in emerging markets than their U.S. counterparts.

Subject: Emerging and frontier financial markets, Mutual funds, Securities markets, Stock markets, Stocks

Keywords: Emerging market, Equity fund, Market, WP

Publication Details

Pages:

24
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2004/133
Stock No:

WPIEA1332004
ISBN:

9781451855524
ISSN:

1018-5941

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