Mutual fund preferences for Latin American equities surrounding financial crises

Using data on dedicated Latin American mutual funds and nearly 1000 Latin American stocks during the Asian and Russian currency crises, I find that the effects of certain firm characteristics on mutual fund stock ownership are different than in non-crisis years. In response to crises, fund managers increase their holdings of cross-listed firms. This finding is evident among closed-end funds, suggesting features beyond liquidity influence stock ownership. Funds also reduce their holdings of firms competing with Russia's main exports. These results suggest that in addition to liquidity, trade links and governance concerns are important determinants of portfolio choice during crises.