Problem Facing the Firm
The Global Management Company, the Japanese Equities Fund’s investment manager, was facing a problem of the rise in the hot money rapid movement out of and in the Fund. As reported in the case, the Japanese Equities Fund had faced considerable cash outflows and inflows from the investors. David Smith, the Japanese Equities Fund’s portfolio manager, alleged that the stockholders were trying to raise their profits through timing the stock exchange market. In other words, these shareholders were trying to take the advantage of the difference between the New York and Tokyo Stock Exchanges’ closing times. Sofia ...