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What's in a name? Mutual fund flows when managers have foreign-sounding names

Version 2 2024-06-06, 11:51
Version 1 2017-03-31, 13:25
journal contribution
posted on 2024-06-06, 11:51 authored by A Kumar, A Niessen-Ruenzi, OG Spalt
We show that name-induced stereotypes affect the investment choices of U.S. mutual fund investors. Managers with foreign-sounding names have about 10% lower annual fund flows, and this effect is stronger among funds with investor clienteles more likely to be suspicious of foreigners. Foreign-named managers experience lower appreciation (greater decline) in flows following good (bad) performance. Following 9/11, flows to funds with managers with Middle-Eastern-sounding names declined abnormally. In an experimental setting in which skill differences are absent, individuals allocate 11% less money to an index fund managed by a foreign-named manager. This gap widens following the Boston marathon bombings.

History

Journal

Review of financial studies

Volume

28

Pagination

2281-2321

Location

Oxford, Eng.

ISSN

0893-9454

eISSN

1465-7368

Language

eng

Publication classification

C1.1 Refereed article in a scholarly journal, C Journal article

Copyright notice

2015, The Author

Issue

8

Publisher

Oxford University Press