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Portfolio choice in Mexico

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  • Horenstein, Alex R.
  • Snir, Avichai

Abstract

We study a comprehensive dataset of more than 25,000 portfolios from 28 different banks or investment banks in Mexico during the period from September 2008 – August 2009. Some of these portfolios are administered by an external advisor and/or contain motivated assets – assets bought by a bank’s client for whom the bank is also the underwriter. We find that portfolios containing motivated assets underperform. These assets usually are allocated to wealthy retail investors, who are less likely to have an external advisor since their account services generally include an internal advisor. Mexican investors’ portfolios are under-diversified and have a significant home bias. External advisors do not seem to improve the performance of a portfolio during the period studied. However, they do help to reduce the home bias and increase a portfolio’s diversification.

Suggested Citation

  • Horenstein, Alex R. & Snir, Avichai, 2017. "Portfolio choice in Mexico," Journal of Behavioral and Experimental Finance, Elsevier, vol. 16(C), pages 1-13.
    • Handle: RePEc:eee:beexfi:v:16:y:2017:i:c:p:1-13
    DOI: 10.1016/j.jbef.2017.08.001
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    1. Moya-Ponce, Claudine & Madrazo-Lemaroy, Pilar, 2023. "Beliefs that provide a foundation for heuristics and biases in financial decision-making," Cuadernos de Gestión, Universidad del País Vasco - Instituto de Economía Aplicada a la Empresa (IEAE).

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    More about this item

    Keywords

    Portfolio choice; Financial advice; Motivated assets; Home bias; Emerging markets;
    All these keywords.

    JEL classification:

    • G10 - Financial Economics - - General Financial Markets - - - General (includes Measurement and Data)
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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