TITLE

The Country Club Effect

PUB. DATE
September 2002
SOURCE
Journal of Financial Planning;Sep2002, Vol. 15 Issue 9, p30
SOURCE TYPE
Academic Journal
DOC. TYPE
Article
ABSTRACT
This article presents an overview of a study, conducted by professors from the University of Michigan and the University of Chicago, regarding the benefits of investing in local-based companies. Financial planners picking individual stocks for clients might want to consider taking a hike--out their front door. A study found that funds that invested heavily in local-based companies outperformed their competitors. Local was defined as companies within 75 miles. The fund managers know more about their local stocks because they can visit them more frequently and have easier access to information--what the authors dubbed "the country club effect." The researchers claimed that the local investments added 2.67 percent to a fund's return, and funds that allocated 20 to 30 percent of their portfolios to local companies outperformed by 3 percent funds with more far-flung assets.
ACCESSION #
7390021

 

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