Abstract
International equity mutual funds increasingly hire managers from countries linked to their geographic mandate. We show that these funds with “home-linked managers” exhibit a strong bias to invest in stocks of that country and they attract more flows. Portfolios of stocks from countries in which a fund has a home-field advantage outperform those managed by funds without home-linked managers. We are unable to identify specific sources of an information advantage associated with the home-linked managers performance. But an analysis of fund flows reveals a role for investor trust in home-linked managers earned primarily through past superior performance.
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