Abstract

http://ssrn.com/abstract=2417976
 


 



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


Geert Bekaert


Columbia Business School - Finance and Economics; National Bureau of Economic Research (NBER)

Kenton Hoyem


Financial Engines, Inc.

Wei-Yin Hu


Financial Engines, Inc.

Enrichetta Ravina


Columbia Business School - Finance and Economics

February 1, 2014


Abstract:     
We examine the international equity allocations of over 3 million individuals in 296 401(k) plans over the 2006-2011 period. These allocations show enormous cross-individual variation, ranging between zero and over 75%, as well as an upward trend that is only partially accounted for by the slight decrease in importance of the US market relative to the world market. International equity allocations also display strong cohort effects, with younger cohorts investing more internationally than older ones, but also each cohort investing more internationally over time. This finding suggests that the home bias phenomenon may slowly disappear over time. Worker’s salary has a positive effect on international allocations, while account balance has a negative one, but these effects are not economically large. Education, financial literacy and the fraction of foreign-born population measured at the zip code level have strong positive effects on international diversification, consistent with familiarity and information stories. In addition, states with more exports have higher international allocations.

Number of Pages in PDF File: 64

Keywords: International Diversification, Microdata, 401(k) Portfolios

JEL Classification: G11, G15, G23

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Date posted: March 31, 2014 ; Last revised: May 7, 2014

Suggested Citation

Bekaert, Geert and Hoyem, Kenton and Hu, Wei-Yin and Ravina, Enrichetta, Who is Internationally Diversified? Evidence from 296 401(k) Plans (February 1, 2014). Available at SSRN: http://ssrn.com/abstract=2417976 or http://dx.doi.org/10.2139/ssrn.2417976

Contact Information

Geert Bekaert
Columbia Business School - Finance and Economics ( email )
3022 Broadway
New York, NY 10027
United States

National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Kenton Hoyem
Financial Engines, Inc. ( email )
1804 Embarcadero Road
Palo Alto, CA 94303
United States
Wei-Yin Hu
Financial Engines, Inc. ( email )
1804 Embarcadero Road
Palo Alto, CA 94303
United States
Enrichetta Ravina (Contact Author)
Columbia Business School - Finance and Economics ( email )
3022 Broadway
New York, NY 10027
United States
HOME PAGE: http://www0.gsb.columbia.edu/faculty/eravina/research.html

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