The State of Origin of Australian Equity: Does Active Fund Manager Location Matter?

Kingsley Fong, David Gallagher and Adrian Lee ()
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Kingsley Fong: Faculty of Business, The University of New South Wales, Sydney, NSW 2052.

Australian Journal of Management, 2008, vol. 32, issue 3, 503-523

Abstract: We examine the relation of active equity fund managers' location proximity to a stock's headquarter and fund managers' stock selection skill and investment behaviour using a representative sample of Australian institutional equity funds. Contrary to the findings of much international research, our study reveals evidence which is inconsistent with a location advantage for Melbourne and Sydney active equity funds. Both Melbourne and Sydney fund managers overweight Melbourne stocks, exhibit skill in picking Sydney stocks and avoid poor performing Melbourne and Sydney stocks. In addition, we find no evidence of word-of-mouth trading effects in Melbourne or Sydney funds. Taken together, this suggests information asymmetries arising from location are weak for Melbourne and Sydney funds.

Keywords: LOCATION; INFORMATION ADVANTAGES; PORTFOLIO MANAGEMENT; INVESTMENT PERFORMANCE (search for similar items in EconPapers)
Date: 2008
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Persistent link: https://EconPapers.repec.org/RePEc:sae:ausman:v:32:y:2008:i:3:p:503-523

DOI: 10.1177/031289620803200307

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