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What's in a Name? Mutual Fund Flows When Managers Have Foreign-Sounding Names

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  • Alok Kumar
  • Alexandra Niessen-Ruenzi
  • Oliver G. Spalt

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.

Suggested Citation

  • Alok Kumar & Alexandra Niessen-Ruenzi & Oliver G. Spalt, 2015. "What's in a Name? Mutual Fund Flows When Managers Have Foreign-Sounding Names," The Review of Financial Studies, Society for Financial Studies, vol. 28(8), pages 2281-2321.
    • Handle: RePEc:oup:rfinst:v:28:y:2015:i:8:p:2281-2321.
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    File URL: http://hdl.handle.net/10.1093/rfs/hhv017
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