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The state of origin of Australian equity: does active fund manager location matter?

journal contribution
posted on 01.03.2008, 00:00 authored by K Fong, D R Gallagher, Adrian LeeAdrian Lee
We examine the relation of active equity fund managers’ location proximity to a stock's headquarter and fund managers’ stock selection skill and investment behaviour using a representative sample of Australian institutional equity funds. Contrary to the findings of much international research, our study reveals evidence which is inconsistent with a location advantage for Melbourne and Sydney active equity funds. Both Melbourne and Sydney fund managers overweight Melbourne stocks, exhibit skill in picking Sydney stocks and avoid poor performing Melbourne and Sydney stocks. In addition, we find no evidence of word-of-mouth trading effects in Melbourne or Sydney funds. Taken together, this suggests information asymmetries arising from location are weak for Melbourne and Sydney funds.

History

Journal

Australian journal of management

Volume

32

Issue

3

Pagination

503 - 523

Publisher

SAGE Publications

Location

London, Eng.

ISSN

0312-8962

Language

eng

Publication classification

C1.1 Refereed article in a scholarly journal