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Households' investments in foreign mutual funds made transparent

Author

Listed:
  • Massimo Coletta

    (Bank of Italy)

  • Raffaele Santioni

    (Bank of Italy)

Abstract

The share of foreign investment funds in the portfolio of Italian households, negligible up to the mid-1990s, has risen significantly since 2012. At the end of 2018, these funds represented 16 per cent of households’ financial portfolios and 54 per cent of their total investment fund holdings. Through foreign investment funds, households invest in the global financial markets, thereby increasing the degree of geographical diversification of their investments and, in principle, improving the risk-profile of their portfolios. By using a combination of very granular databases, this paper provides for the first time a comprehensive description of the foreign funds held by Italian households, with a particular focus on the period 2008-2017. The main contribution is the discovery of the final destination of the savings invested by Italian households via foreign mutual funds, broken down by country, sector and type of instrument. Moreover, the high data granularity has enabled us to estimate the total expense ratio and the net return, broken down into the main fund categories.

Suggested Citation

  • Massimo Coletta & Raffaele Santioni, 2019. "Households' investments in foreign mutual funds made transparent," Questioni di Economia e Finanza (Occasional Papers) 533, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:opques:qef_533_19
    as

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    File URL: https://www.bancaditalia.it/pubblicazioni/qef/2019-0533/QEF_533_19.pdf
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    References listed on IDEAS

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    More about this item

    Keywords

    asset allocation; look-through; mutual funds; portfolio investment;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors
    • G50 - Financial Economics - - Household Finance - - - General

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