Ali, SaraBadshah, IhsanDemirer, RizaHegde, Prasad2023-11-232023-11-232023-01-29International Review of Finance, ISSN: 1369-412X (Print); 1468-2443 (Online), Wiley, 23(3), 666-679. doi: 10.1111/irfi.124071369-412X1468-2443http://hdl.handle.net/10292/16981Utilizing a large sample of actively managed equity funds and a recently developed EPU index for New Zealand, we show that fund flow performance sensitivity decreases with policy uncertainty. The role of policy uncertainty as a determinant of fund flow performance sensitivity is found to be stronger, particularly for funds with global focus, large sized funds, high momentum funds and those with high idiosyncratic volatility and low downside risk. The findings support the argument that high policy uncertainty dampens investors' ability to process information that allows them to distinguish fund manager skill from luck. The results remain strong after accounting for various macroeconomic factors.© 2023 The Authors. International Review of Finance published by John Wiley & Sons Australia, Ltd on behalf of International Review of Finance Ltd. This is an open access article under the terms of the Creative Commons Attribution-NonCommercial-NoDerivs License, which permits use and distribution in any medium, provided the original work is properly cited, the use is non-commercial and no modifications or adaptations are made.http://creativecommons.org/licenses/by-nc-nd/4.0/38 Economics3502 Banking, Finance and Investment3801 Applied Economics35 Commerce, Management, Tourism and Services1501 Accounting, Auditing and Accountability1502 Banking, Finance and Investment3501 Accounting, auditing and accountability3502 Banking, finance and investment3801 Applied economicsJournal ArticleOpenAccess10.1111/irfi.12407