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Concentration in mutual fund equity holdings during global economic crises

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  • Fedenia, Mark
  • Skiba, Hilla
  • Sokolyk, Tatyana

Abstract

This study examines whether portfolio equity concentration at the country, industry, and security levels results in better performance of global mutual funds during periods of significant shocks to the global economy. We document that mutual funds’ equity portfolios are more concentrated across countries and industries during economic crises, and fund managers engage in more active security selection rather than passive benchmark investing. More concentrated equity allocations are associated with higher portfolio returns and appear to be driven by information advantage. Overall, results suggest that mutual fund managers employ information advantage and generate higher risk-adjusted returns with concentrated positions in global markets during times of negative shocks to the global economy.

Suggested Citation

  • Fedenia, Mark & Skiba, Hilla & Sokolyk, Tatyana, 2025. "Concentration in mutual fund equity holdings during global economic crises," International Review of Financial Analysis, Elsevier, vol. 106(C).
    • Handle: RePEc:eee:finana:v:106:y:2025:i:c:s1057521925005009
    DOI: 10.1016/j.irfa.2025.104413
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    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • Z10 - Other Special Topics - - Cultural Economics - - - General

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