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What's in a Name? Mutual Fund Flows When Managers Have Foreign-Sounding Names

Alok Kumar1; Alexandra Niessen-Ruenzi; Oliver G. Spalt2

1 University of Miami · 2 Tilburg University

Review of Financial Studies 2015

We show that name-induced stereotypes affect the investment choices of U.S. mutual fund investors. Managers with foreign-sounding names have about 10% lower annual fund flows, and this effect is stronger among funds with investor clienteles more likely to be suspicious of foreigners. Foreign-named managers experience lower appreciation (greater decline) in flows following good (bad) performance. Following 9/11, flows to funds with managers with Middle-Eastern-sounding names declined abnormally. In an experimental setting in which skill differences are absent, individuals allocate 11% less money to an index fund managed by a foreign-named manager. This gap widens following the Boston marathon bombings.

DOI
10.1093/rfs/hhv017
Volume
28 (8)
Pages
2281-2321
Language
en
Export
BibTeX
Sources
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