Navigating Geoeconomic Risk: Evidence from U.S. Mutual Funds

Matteo Crosignani, Lina Han () and Marco Macchiavelli
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Lina Han: https://www.isenberg.umass.edu/people/lina-han-0

No 1172, Staff Reports from Federal Reserve Bank of New York

Abstract: How do investors respond to firm-level geoeconomic shocks? U.S. export controls restrict technology sales to targeted Chinese firms, depressing the stock prices of their U.S. suppliers. We trace these shocks to domestic equity mutual funds. Funds more exposed to affected suppliers display higher volatility and lower performance. Although export controls target specific firms, they trigger portfolio-wide adjustments: funds rebalance away from affected suppliers and other U.S. exporters to China, leaving portfolios more concentrated. Specialist and high-fee funds see smaller performance declines. Affected suppliers’ stock prices subsequently recover, consistent with dissipating selling pressure or higher required returns.

Keywords: mutual funds; Asset allocation; geoeconomic risk; Export controls (search for similar items in EconPapers)
JEL-codes: F38 F51 G12 (search for similar items in EconPapers)
Pages: 65
Date: 2025-11-01
New Economics Papers: this item is included in nep-bec, nep-fmk and nep-rmg
Note: Revised September 2026.
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DOI: 10.59576/sr.1172

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