Controlling Hot Money
Posted: 26 Jan 2012
Date Written: December 16, 2011
The manager of the Japan Equities Fund is faced with an increase in "hot money" moving quickly in and out of the Fund. This short term trading is an attempt to take advantage of the difference between the closing times of the Tokyo and New York Stock Exchanges. The CFO of the fund manager considers the various strategies available to limit such short term trading, which will be presented soon to the Fund's board of directors.
Learning Objective: To educate students about how international stock funds price their securities across different time zones and deal with market timing by fund shareholders.
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