Authors: Matteo Crosignani, Lina Han, and Marco Macchiavelli
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Staff Reports
Navigating Geoeconomic Risk: Evidence from U.S. Mutual Funds
Number 1172
November 2025 Revised April 2026
November 2025 Revised April 2026
JEL classification: G12, F51, F38
How do investors perceive and navigate the emerging geoeconomic risk? We identify firm-level geoeconomic risk using supply-chain links to Chinese firms targeted by U.S. export controls. Affected U.S. suppliers experience negative abnormal returns around policy announcements. These shocks propagate to mutual funds through portfolio holdings, raising volatility and lowering performance. Fund managers respond by reducing exposure to China-linked exporters, increasing portfolio concentration, and buying more lottery-like stocks. A long–short portfolio based on geoeconomic risk exposure earns positive and significant future returns, suggesting investors demand compensation for bearing the high geoeconomic risk.
Author Disclosure Statement(s)
Matteo Crosignani
I declare that I do not have relevant or material financial interests that relate to the research described in the paper titled “Navigating Geoeconomic Risk: Evidence from U.S. Mutual Funds.”
Lina Han
I declare that I do not have relevant or material financial interests that relate to the research described in the paper titled “Navigating Geoeconomic Risk: Evidence from U.S. Mutual Funds.”
Marco Macchiavelli
I declare that I do not have relevant or material financial interests that relate to the research described in the paper titled “Navigating Geoeconomic Risk: Evidence from U.S. Mutual Funds.”
I declare that I do not have relevant or material financial interests that relate to the research described in the paper titled “Navigating Geoeconomic Risk: Evidence from U.S. Mutual Funds.”
Lina Han
I declare that I do not have relevant or material financial interests that relate to the research described in the paper titled “Navigating Geoeconomic Risk: Evidence from U.S. Mutual Funds.”
Marco Macchiavelli
I declare that I do not have relevant or material financial interests that relate to the research described in the paper titled “Navigating Geoeconomic Risk: Evidence from U.S. Mutual Funds.”
Suggested Citation:
Crosignani, Matteo, Lina Han, and Marco Macchiavelli. 2025. “Navigating Geoeconomic Risk: Evidence from U.S. Mutual Funds.” Federal Reserve Bank of New York Staff Reports, no. 1172, revised April 2026. https://doi.org/10.59576/sr.1172
Crosignani, Matteo, Lina Han, and Marco Macchiavelli. 2025. “Navigating Geoeconomic Risk: Evidence from U.S. Mutual Funds.” Federal Reserve Bank of New York Staff Reports, no. 1172, revised April 2026. https://doi.org/10.59576/sr.1172
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