Active Investing in BRIC Countries

We measure active investment for BRIC markets equity funds by contrasting fund returns with local and global index returns. On average passive funds are assumed to replicate the market and therefore their returns are well explained only by local index. We contrast local managers, with non-local ones, self-declared geo-focused on the local market. With this method, we are able to uncover and measure overconfidence biases where local managers are more tied to local indices then mangers explicitly geo-focused on those indices. Results show meaningful differences among countries and fund clusters.