What is in a Name? Mutual Fund Flows When Managers Have Foreign-Sounding Names
University of Miami - School of Business Administration
University of Mannheim - Department of Finance
Oliver G. Spalt
Tilburg University - Department of Finance
January 4, 2015
Review of Financial Studies, Forthcoming
We show that name-induced stereotypes affect the investment choices of U.S. mutual fund investors. Managers with foreign-sounding names have about 10% lower annual fund flows and this effect is stronger among funds with investor clienteles more likely to be suspicious of foreigners. Foreign-name managers experience lower appreciation (greater decline) in flows following good (bad) performance. Following 9/11, flows to funds with managers with Middle-Eastern sounding names decline abnormally. In an experimental setting where skill differences are absent, individuals allocate 11% less money to an index fund managed by a foreign-name manager. This gap widens following the Boston marathon bombings.
Number of Pages in PDF File: 56
Date posted: November 2, 2011 ; Last revised: January 10, 2015
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