Investor-stock decoupling in mutual funds

Miguel A. Ferreira, Massimo Massa, Pedro Matos

Research output: Contribution to journalArticlepeer-review

9 Citations (Scopus)
13 Downloads (Pure)


We investigate whether mutual funds whose investors and stocks are decoupled (i.e., investor location does not coincide with that of the stock holdings) benefit from a natural hedge as they have fewer outflows during market downturns and fewer inflows during upturns. Using a sample of equity mutual funds from 26 countries, we find that funds with higher investor-stock decoupling exhibit higher performance, and this is more pronounced during the 2007-2008 financial crisis. We also find that decoupling allows fund managers to take less risk, be more active, and tilt their portfolios toward smaller and less liquid stocks.

Original languageEnglish
Pages (from-to)2144-2163
Number of pages20
JournalManagement Science
Issue number5
Publication statusPublished - 1 May 2018


  • Fund flows
  • Limits to arbitrage
  • Mutual funds
  • Performance
  • Risk taking


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