How global is your mutual fund? International diversification from multinationals

Irem Demirci, Miguel A. Ferreira, Pedro Matos, Clemens Sialm

Research output: Contribution to journalArticlepeer-review

6 Citations (Scopus)


We show that mutual funds worldwide provide substantial international exposure through their domestic holdings of multinationals. The international exposure of domestic funds increases, on average, by 32 percentage points when we consider international corporate diversification. We find that funds with higher indirect international exposure perform better in both the cross-section and the time series. This effect is primarily driven by the fund managers’ ability to invest in multinationals, rather than the performance of those multinationals. Our findings support the hypothesis that international diversification from multinationals reduces the transaction and information costs of investing abroad.
Original languageEnglish
Pages (from-to)3337-3372
JournalReview Of Financial Studies
Issue number7
Early online date1 Oct 2021
Publication statusPublished - Jul 2022


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