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Who is Internationally Diversified? Evidence from 296 401(k)

Author

Listed:
  • Geert Bekaert
  • Kenton Hoyem
  • Wei-Yin Hu
  • Enrichetta Ravina

Abstract

We examine the international equity allocations of 3.8 million individuals in 296 401(k) plans over the 2005-2011 period. We find enormous cross-individual variation, ranging from zero to over 75%, and strong cohort effects, with younger cohorts investing more internationally than older ones, and each cohort investing more internationally over time. Access to financial advice, lower fees and more international fund options are associated with higher international allocations, suggesting a role for plan design and policy. Education, financial literacy and the fraction of foreign-born population in the zip code also have positive effects on international diversification, consistent with familiarity and information stories.

Suggested Citation

  • Geert Bekaert & Kenton Hoyem & Wei-Yin Hu & Enrichetta Ravina, 2015. "Who is Internationally Diversified? Evidence from 296 401(k)," NBER Working Papers 21236, National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberwo:21236
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    Cited by:

    1. John Y. Campbell, 2016. "Restoring Rational Choice: The Challenge of Consumer Financial Regulation," American Economic Review, American Economic Association, vol. 106(5), pages 1-30, May.
    2. Karolyi, G. Andrew & Ng, David T. & Prasad, Eswar, 2015. "The Coming Wave: Where Do Emerging Market Investors Put Their Money?," IZA Discussion Papers 9405, Institute for the Study of Labor (IZA).
    3. Graciela Sanroman & Guillermo Santos, 2017. "The Joint Distribution of Income and Wealth in Uruguay," Documentos de Trabajo (working papers) 0717, Department of Economics - dECON.

    More about this item

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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