Is There a Home Field Advantage in Global Markets?
62 Pages Posted: 13 Nov 2017 Last revised: 27 Sep 2018
Date Written: August 21, 2017
International equity mutual funds that hire managers from a country linked to the fund’s geographic mandate exhibit a strong bias to invest in stocks of that country. These funds with “home-biased managers” attract disproportionally more flows and reveal greater flow-performance sensitivity. Stocks domiciled in countries in which the fund has a home-field advantage outperform those held by other funds with investments in those same countries, but without home-biased managers. We interpret this new finding as evidence of an information-based channel through which the home-bias phenomenon may be revealed and we link it to theories that emphasize the role of an informational endowment advantage.
Keywords: international mutual funds, home-bias, information endowment, performance
JEL Classification: F32, F36, G11, G15, G23
Suggested Citation: Suggested Citation