The return on international investment products

Individual investors have access to an ever-increasing number of US-registered equity funds that invest in international assets, as well as institutional investment products focused on global assets. Despite the growing importance of global equity markets for US investors, there is little academic research devoted to their study. Jeffrey Busse, associate professor of finance, Amit Goyal (University of Lausanne), and Sunil Wahal (Arizona State U) advanced the research, tackling the common theory that less developed markets are less efficient and, consequently, “exploitable by active fund managers.” The trio analyzed a large sampling of active retail mutual funds and institutional products investing in global equity markets, concentrating their research on a sample period from 1991 to 2009. The authors used quarterly returns net of trading costs and gross of fees. They also collected information on annual fee schedules, portfolio turnover, and assets under management. On average and in the aggregate, the data showed a lack of “superior performance” for the sampling. The research paper won the Spangler IQAM Best Paper in Investments Prize at the 2014 European Finance Association Annual Meeting in Lugano, Switzerland.

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