Locals do it better? An empirical study of local advantage in fund management

Abstract: This paper will address whether local Japanese fund managers outperform international -or more specifically Nordic- fund managers when investing in the Japanese market. If local fund managers do in fact have an advantage with respect to domestic assets it could be profitable for international fund families to outsource their activities to local firms. Starting from the article "Do local analysts know more? A cross-country study of performance of local analysts and foreign analysts." , we have used a similar approach but focused on one specific geographical area, as well as focused on actual returns as opposed to forecasted returns. As hypothesized, we found that that the domestic Japanese fund managers outperform their Nordic counterparts.