Do Investors Treat Domestic and Foreign Asset Managers Differently?

Abstract Book of the 8th International Conference on New Trends in Management, Business and Economics

Year: 2026

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Do Investors Treat Domestic and Foreign Asset Managers Differently?

Qambar Abidi

ABSTRACT:

Investor allocation decisions in mutual funds are widely influenced by past performance, reflecting a well-documented tendency for investors to direct capital toward funds that have recently performed well. While this relationship between fund flows and performance has been extensively studied, less attention has been paid to whether investor responses differ depending on the origin of the asset management company operating in the domestic market. This question is particularly relevant in emerging markets where both domestic and foreign financial intermediaries compete for investor capital.
This study examines investor responses to mutual fund performance in the context of the rapidly expanding Indian mutual fund industry. Over the past two decades, the sector has experienced substantial growth in assets under management alongside increased participation by international asset management firms. During the same period, several foreign-origin firms entered and later exited the market, raising questions about the role of investor preferences and competitive dynamics in shaping capital flows across different types of asset managers.
Using mutual fund flow patterns as an indicator of investor behaviour, the study investigates whether investors respond differently to the performance of funds managed by domestic and foreign asset management companies. The analysis also explores how investor responses vary across different segments of the performance distribution, providing insights into how investors allocate capital among top- and lower-performing funds.
The findings contribute to the literature on investor behaviour, mutual fund competition, and international financial intermediation. By examining investor allocation patterns in a large emerging market, the study offers new perspectives on how investors evaluate domestic and foreign financial institutions operating within the same market environment.

Keywords: Asset Management Companies; Emerging Markets; India; Investor Behaviour; Mutual Fund Flows