Determinants of flows into retail international equity funds
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- Zhao, X. J Int Bus Stud (2008) 39: 1169. doi:10.1057/palgrave.jibs.8400408
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Diversification benefits appear to be a major reason why investors choose international equity funds. Funds less correlated with the US market tend to receive higher flows from investors. In addition, investors prefer funds that invest in a diversified portfolio of securities from different regions in the world to funds that focus only on a specific region. Risk-adjusted return is shown to exert greater effect on flows into international equity funds than raw return. International equity funds from fund families offering a greater number of investment objectives also receive higher flows. On the other hand, international equity fund investors do not appear to be sensitive to expenses or exchange rates.