Concentration in mutual fund equity holdings during global economic crises

Mark Fedenia, Hilla Skiba and Tatyana Sokolyk

International Review of Financial Analysis, 2025, vol. 106, issue C

Abstract: This study examines whether portfolio equity concentration at the country, industry, and security levels results in better performance of global mutual funds during periods of significant shocks to the global economy. We document that mutual funds’ equity portfolios are more concentrated across countries and industries during economic crises, and fund managers engage in more active security selection rather than passive benchmark investing. More concentrated equity allocations are associated with higher portfolio returns and appear to be driven by information advantage. Overall, results suggest that mutual fund managers employ information advantage and generate higher risk-adjusted returns with concentrated positions in global markets during times of negative shocks to the global economy.

Keywords: Global economic crises; Portfolio concentration; Mutual fund holdings; International finance; Information advantage (search for similar items in EconPapers)
JEL-codes: G11 G15 G23 Z10 (search for similar items in EconPapers)
Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:eee:finana:v:106:y:2025:i:c:s1057521925005009

DOI: 10.1016/j.irfa.2025.104413

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