Geography and Local (Dis)Advantage: Evidence from Muni Bond Funds

31 Pages Posted: 24 Mar 2010 Last revised: 18 Sep 2014

See all articles by David A. Rakowski

David A. Rakowski

University of Texas at Arlington

Saiying Deng

Kent State University

Date Written: September 12, 2014


We use the geographically-constrained holdings of single-state municipal-bond mutual funds in order to compare the performance of local and non-local mutual fund managers. In general, we find that local managers display worse performance and significantly different risk profiles than non-local fund managers. Despite their lower returns overall, locally-managed muni bond funds display a relative advantage in markets that are financially illiquid, spatially compact, and with more population. Overall, locally-managed muni bond funds may survive in a competitive market for investment management because they provide a product that is relatively low-cost, more financially stable, and with distinct benefits in certain regional markets.

Keywords: Geography, Muni Bond Funds, Local, Mutual Fund Performance, Risk, Location, Corruption, Transparency

JEL Classification: G12, G18, H74, R1

Suggested Citation

Rakowski, David A. and Deng, Saiying, Geography and Local (Dis)Advantage: Evidence from Muni Bond Funds (September 12, 2014). Available at SSRN: or

David A. Rakowski (Contact Author)

University of Texas at Arlington ( email )

Box 19449 UTA
Arlington, TX 76019
United States

Saiying Deng

Kent State University ( email )

College of Business Administration
P.O. Box 5190
Kent, OH 44242-0001
United States
3306721213 (Phone)

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