The Role of Mature Market Mutual Funds in Emerging Markets

The Role of Mature Market Mutual Funds in Emerging Markets

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The expansion of the global mutual funds industry has been characterized by growth in mature as well as emerging markets. This has clearly contributed to the development of local securities markets in emerging market economies, which in turn, has been key in attracting investment inflows from overseas funds. A major concern, however, is that large foreign investors could significantly disrupt the stability of local capital markets in the event of a market shock, with systemic implications for the real economy. Our estimates suggest that while local investors remain the more important group in terms of market share, the influence of foreign funds cannot be discounted. Asset allocation decisions by mature market funds- both dedicated and crossover-in aggregate, could affect emerging markets. In particular, European mutual funds appear to play a much bigger role in emerging markets than their U.S. counterparts.9While the funds invested Hong Kong SAR are predominantly in equities, at approximately 56 percent, the proportion of funds ... That said, local mutual funds only hold 4.5 percent of Koreaa#39;s stock market capitalization and 5 percent of total anbsp;...

Title:The Role of Mature Market Mutual Funds in Emerging Markets
Author:Mr. Amadou N. R. Sy, Ms. Li L. Ong
Publisher:International Monetary Fund - 2004-07-01


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