Herding behaviour in Spanish global funds' country allocations *

ABSTRACTThe monthly portfolio holdings of 363 Spanish global funds were analysed to test for herding behaviour on the part of fund managers. Unlike in previous studies, our approach to herding behaviour is not on a stock level but rather on a country allocation level. The country allocation is especially interesting in global funds, which have no portfolio constraints. Significant herding is found in the sample, and the level of herding is higher in countries with smaller portfolio shares. In the sample analysed, there is no clear evidence of informational cascades according to the country in which managers invest. Large fund families show significant leading behaviour in a higher number of countries than small fund families.