What is in a name? Mutual fund flows when managers have foreign-sounding names

A. Kumar, A. Niessen-Ruenzi, O.G. Spalt

Research output: Contribution to journalArticleScientificpeer-review

14 Citations (Scopus)

Abstract

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.
Original languageEnglish
Pages (from-to)2281-2321
JournalThe Review of Financial Studies
Volume28
Issue number8
DOIs
Publication statusPublished - Aug 2015

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