This paper investigates how the geographical distribution of shareholders in Chinese mutual fund management companies influences investment decisions. We show that mutual funds are more inclined to hold and overweight stocks from regions where their shareholders are located, thus capitalizing on a local information advantage. By examining changes in fund holdings in response to shifts in the shareholder base, we rule out the possibility that these effects are driven by fund managers’ local biases. Our findings reveal that stocks from the same region as the fund’s shareholders tend to outperform and significantly contribute to the fund’s overall performance.