Report
Navigating Geoeconomic Risk: Evidence from U.S. Mutual Funds
Abstract: How do investors respond to firm-level geoeconomic shocks? U.S. export controls restrict technology sales to targeted Chinese firms, depressing the stock prices of their U.S. suppliers. We trace these shocks to domestic equity mutual funds. Funds more exposed to affected suppliers display higher volatility and lower performance. Although export controls target specific firms, they trigger portfolio-wide adjustments: funds rebalance away from affected suppliers and other U.S. exporters to China, leaving portfolios more concentrated. Specialist and high-fee funds see smaller performance declines. Affected suppliers’ stock prices subsequently recover, consistent with dissipating selling pressure or higher required returns.
JEL Classification: F38; F51; G12;
https://doi.org/10.59576/sr.1172
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Bibliographic Information
Provider: Federal Reserve Bank of New York
Part of Series: Staff Reports
Publication Date: 2025-11-01
Number: 1172
Note: Revised September 2026.