Abstract
This paper examines whether foreign country consumer sentiment influences the pricing of closed-end country funds. It links the literature on investor sentiment and stock returns to the literature on sentiment and closed-end fund pricing. Using foreign country consumer sentiment indices, we examine the effect of sentiment on the pricing of UK closed-end country funds between 1992 and 2009. We find that foreign country consumer sentiment is a significant negative predictor of the share price and net asset value return over different time horizons. Our findings suggest that UK closed-end country funds are a good vehicle for diversification because their share prices reflect foreign market sentiment more than UK market sentiment.
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