The effects of U.S. monetary policy on international mutual fund investment

We study the effects of U.S. monetary policy on international mutual fund investment. apply a novel variant shock identification procedure in Bu et al. (2021) to decompose observed surprises into pure and information news components. An increase interest rates driven by leads large persistent outflows from emerging markets (EMs) lesser extent global funds. On other hand, increases positive shocks (i) do not cause EM funds, (ii) lead investors reallocate capital out safe bond funds growth-sensitive equity attribute these differences risk-taking channel policy. Pure heighten risk aversion, while lower uncertainty.