Do global equity mutual funds exhibit home bias?

Takato Hiraki and Ming Liu

Journal of Behavioral and Experimental Finance, 2021, vol. 31, issue C

Abstract: We study a sample of U.S. global equity mutual funds that invest in markets around the world. While the existing literature shows significant home bias among investors, we find that U.S. global funds on average do not exhibit home bias but with cross-fund variation. Fund manager teams with more foreign educational background, younger fund managers, and those with MBA degrees tend to invest more in international markets. When sorting funds into deciles by the level of home bias, we find that both home- and foreign-biased funds tend to outperform medium decile funds and hold concentrated portfolios, supporting the information hypothesis for home and foreign bias. Further, the well-performing foreign-biased funds are much larger than other funds, indicating that there are no decreasing returns to scale among global equity mutual funds.

Keywords: Home bias; Global equity mutual funds (search for similar items in EconPapers)
JEL-codes: G11 G15 G23 (search for similar items in EconPapers)
Date: 2021
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:31:y:2021:i:c:s2214635021000526

DOI: 10.1016/j.jbef.2021.100508

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