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Economic policy uncertainty and fund flows to the United States

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  • French, Joseph J.
  • Li, Wei-Xuan

Abstract

In this letter, we examine the impact of economic policy uncertainty (EPU) on aggregate fund flows to the United States (US). US and global EPU are strongly and negatively related to equity fund flows in the short run. However, initial declines reverse over the medium term and have a positive cumulative effect on equity allocations to the US. EPU is positively related to Treasury flows in the short run that indicates managers reallocate their portfolios following uncertainty shocks. Indeed, we show a negative relation between equity fund flows and Treasury flows. Furthermore, both types of fund flows are more sensitive to US EPU compared to global EPU.

Suggested Citation

  • French, Joseph J. & Li, Wei-Xuan, 2022. "Economic policy uncertainty and fund flows to the United States," Finance Research Letters, Elsevier, vol. 45(C).
    • Handle: RePEc:eee:finlet:v:45:y:2022:i:c:s1544612321002075
    DOI: 10.1016/j.frl.2021.102126
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