In the name of the law: How does legal distance affect US international mutual funds’ financial performance?

Jorge Fleta-Asín and Fernando Muñoz

Research in International Business and Finance, 2025, vol. 74, issue C

Abstract: In this research, we investigate how the distance in legal features between investor and investee countries affects international mutual funds’ financial performance. We analyse a sample formed by 1160 US equity mutual funds in the period 2000–2021 (73,256 monthly portfolios) with an international investment vocation. Our results show that managers of mutual funds holding a portfolio that is exposed to more distant markets in terms of legal features jeopardize the financial performance delivered to investors. We also find a moderating factor whereby investing in larger stock markets alleviates the negative effect of the legal distance.

Keywords: International mutual funds; Investor protection; Legal origin; Market capitalization; Securities laws (search for similar items in EconPapers)
JEL-codes: B17 G11 G14 G15 G28 P48 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:74:y:2025:i:c:s0275531924004549

DOI: 10.1016/j.ribaf.2024.102661

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