Information Diffusion among International Fund Managers: Multicountry Evidence |
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| Authors: | Jerry T Parwada Joey W Yang |
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| Institution: | 1. Jerry T. Parwada is an Associate Professor of Finance at the 2006 Australian School of Business, University of New South Wales in Sydney, Australia.;2. Joey W. Yang is a Senior Lecturer in Finance at the University of Western Australia in Crawley, Perth, Western Australia. |
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| Abstract: | Investors seeking exposure to global equity markets commonly buy international mutual funds managed by locally based fund managers. How competitive is this form of intermediated investing? We investigate whether international equity fund managers mimic each other's portfolio holdings and analyze the performance implications of these actions. Managers based in the same country have more stocks held in common than those of their peers in other countries. Correlated trading among domestic fund managers contributes significantly to this pattern. Cross‐border managers' portfolio holdings and trades are also relevant to the actions of domestic managers. Stock selection strategies based on mimicry and differentiation both deliver short‐term superior performance. Mimicked sales occur while prices are rising. |
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