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Do Local Investors Know More? Evidence from Mutual Fund Location and Investments

Author

Listed:
  • Johan Sulaeman

    (Edwin L. Cox School of Business, Southern Methodist University, PO Box 750333, Dallas, TX 75275, USA)

Abstract

This study finds that actively managed mutual funds do not display abnormal superior performance in local stocks relative to their own performance in distant stocks. However, the trading behavior of these funds is consistent with a widespread perception that local funds have an informational advantage. This perception is not only held by the local fund managers themselves (who tend to trade more aggressively), but also shared by distant managers (who tend to mimic local managers).

Suggested Citation

  • Johan Sulaeman, 2014. "Do Local Investors Know More? Evidence from Mutual Fund Location and Investments," Quarterly Journal of Finance (QJF), World Scientific Publishing Co. Pte. Ltd., vol. 4(02), pages 1-39.
    • Handle: RePEc:wsi:qjfxxx:v:04:y:2014:i:02:n:s2010139214500104
    DOI: 10.1142/S2010139214500104
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    Citations

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    Cited by:

    1. Gennaro Bernile & Alok Kumar & Johan Sulaeman & Qin Wang, 2019. "Has local informational advantage disappeared?," Review of Financial Economics, John Wiley & Sons, vol. 37(1), pages 38-60, January.
    2. Jank, Stephan & Smajlbegovic, Esad, 2015. "Dissecting short-sale performance: Evidence from large position disclosures," CFR Working Papers 15-15, University of Cologne, Centre for Financial Research (CFR).
    3. Saiying Deng & David Rakowski, 2016. "Geography and Local (Dis)advantage: Evidence from Muni Bond Funds," Quarterly Journal of Finance (QJF), World Scientific Publishing Co. Pte. Ltd., vol. 6(03), pages 1-24, September.
    4. Douglas Cumming & Michele Meoli & Silvio Vismara, 2021. "Does equity crowdfunding democratize entrepreneurial finance?," Small Business Economics, Springer, vol. 56(2), pages 533-552, February.
    5. Christina Guenther & Sofia Johan & Denis Schweizer, 2018. "Is the crowd sensitive to distance?—how investment decisions differ by investor type," Small Business Economics, Springer, vol. 50(2), pages 289-305, February.

    More about this item

    Keywords

    Mutual funds; local investors;

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