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Mutual fund performance and management location

Author

Listed:
  • Andrew Clare

    (The Sir John Cass Business School, 106, Bunhill Row, City University)

  • Dirk Nitzsche
  • Meadhbh Sherman

Abstract

In this article we develop and explore the most comprehensive database of fund manager performance delineated by location. We use this database and four performance evaluation techniques to determine whether a fund manager’s location relative to the location of the securities they manage are listed and traded has any impact on fund performance. The main results of our article are very positive for the US fund management industry. Any investor wishing to invest in a US equity mutual fund would be well advised to have this portfolio managed by a manager based in the United States. Compared with European managers of US equity mutual funds, US managers produce higher mean alpha and display a far greater tendency for positive performance persistence.

Suggested Citation

  • Andrew Clare & Dirk Nitzsche & Meadhbh Sherman, 2013. "Mutual fund performance and management location," Journal of Asset Management, Palgrave Macmillan, vol. 14(6), pages 336-353, December.
    • Handle: RePEc:pal:assmgt:v:14:y:2013:i:6:d:10.1057_jam.2013.23
    DOI: 10.1057/jam.2013.23
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    References listed on IDEAS

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    1. Fama, Eugene F. & French, Kenneth R., 1993. "Common risk factors in the returns on stocks and bonds," Journal of Financial Economics, Elsevier, vol. 33(1), pages 3-56, February.
    2. Rogér Otten & Dennis Bams, 2007. "The Performance of Local versus Foreign Mutual Fund Managers," European Financial Management, European Financial Management Association, vol. 13(4), pages 702-720, September.
    3. Fletcher, Jonathan, 1999. "The evaluation of the performance of UK American unit trusts," International Review of Economics & Finance, Elsevier, vol. 8(4), pages 455-466, November.
    4. Hendricks, Darryll & Patel, Jayendu & Zeckhauser, Richard, 1993. "Hot Hands in Mutual Funds: Short-Run Persistence of Relative Performance, 1974-1988," Journal of Finance, American Finance Association, vol. 48(1), pages 93-130, March.
    5. Shukla, Ravi K. & van Inwegen, Gregory B., 1995. "Do locals perform better than foreigners?: An analysis of UK and US mutual fund managers," Journal of Economics and Business, Elsevier, vol. 47(3), pages 241-254, August.
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    Cited by:

    1. Galán, Jorge & Ramos, Sofía B. & Veiga, Helena, 2015. "An analysis of the dynamics of efficiency of mutual funds," DES - Working Papers. Statistics and Econometrics. WS ws1517, Universidad Carlos III de Madrid. Departamento de Estadística.

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