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Currency Markets, Performance, and Mutual Fund Cash Flows

Author

Listed:
  • John C. Adams

    (Assistant Professor, Department of Accounting and Finance, Coggin College of Business, University of North Florida, 1 UNF Drive, Room 42/3406, Jacksonville, F1 32224, (904) 620-3923; (904) 620-3861 fax; Email: john.adams@unf.edu)

  • F. Reid Hartsfield

    (Vice President, BB&T Wealth Management, 200 W Forsyth, Suite 130, Jacksonville, FL 32202, (904)361-5254; (904)361-5286 fax; Email: Reid.Hartsfield@bbandt.com)

Abstract

We analyze cash flows in and out of US based domestic and international mutual funds. Our results suggest that currency market changes are important considerations when investors decide to purchase or redeem mutual fund shares. Specifically, we find that increased foreign currency values are positively related to fund flows. While exchange rates are important considerations for investor cash flows in and out of domestic and international funds, we find that foreign fund flows are more sensitive to exchange rates. Furthermore, the increased flows into international funds over the 1998–2007 sample period are not exclusively due to superior risk adjusted performance relative to domestic funds. JEL Classification : G23, F31

Suggested Citation

  • John C. Adams & F. Reid Hartsfield, 2011. "Currency Markets, Performance, and Mutual Fund Cash Flows," Journal of Interdisciplinary Economics, , vol. 23(2), pages 123-136, April.
    • Handle: RePEc:sae:jinter:v:23:y:2011:i:2:p:123-136
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    More about this item

    Keywords

    mutual funds; foreign currency;

    JEL classification:

    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • F31 - International Economics - - International Finance - - - Foreign Exchange

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