Asset Allocations in a Thai Defined Contribution Fund: A Behavioural Experiment Conditioned on Financial Expertise

38 Pages Posted: 22 Oct 2015

See all articles by Pornanong Budsaratragoon

Pornanong Budsaratragoon

Chulalongkorn University - Faculty of Commerce and Accountancy

David Hillier

University of Strathclyde - Department of Accounting and Finance

Allan Hodgson

University of Queensland - Faculty of Business, Economics and Law; Financial Research Network (FIRN)

Suntharee Lhaopadchan

Kasetsart University - Faculty of Management Sciences

Date Written: October 20, 2015

Abstract

This paper reports the results of a behavioural finance experiment on the ability of Thai individuals to make informed investment decisions under a defined contribution self-management option. Using an asset allocation dataset from members of the Thai Government Pension Fund (TGPF) and a control sample of financially knowledgeable individuals (MBA finance students), we report that TGPF members are relatively more risk averse, exhibit a greater home investment bias, and over-react to market price movements. Financially savvy MBA students hold more shares and international securities, and earn greater long term returns. The fact that the worse performing TGPF member allocations outperform the TGPF default plan, along with strong preferences for time liquidity diversification, provide challenges for TGPF managers to increase their financial engineering and to continue to lobby for restrictive investment ceilings to be revised.

Keywords: Thai defined contribution pensions; Home bias in pensions; Default pension plans, Pensions and financial literacy; Behavioural pension allocations

JEL Classification: D91, E21, G11, G23, I10, J10

Suggested Citation

Budsaratragoon, Pornanong and Hillier, David and Hodgson, Allan C. and Lhaopadchan, Suntharee, Asset Allocations in a Thai Defined Contribution Fund: A Behavioural Experiment Conditioned on Financial Expertise (October 20, 2015). Available at SSRN: https://ssrn.com/abstract=2676713 or http://dx.doi.org/10.2139/ssrn.2676713

Pornanong Budsaratragoon

Chulalongkorn University - Faculty of Commerce and Accountancy ( email )

Bangkok, 10330
Thailand

David Hillier

University of Strathclyde - Department of Accounting and Finance ( email )

Curran Building
100 Cathedral Street
Glasgow G4 0LN
United Kingdom
44 0141 330 4809 (Phone)
44 0141 330 4442 (Fax)

Allan C. Hodgson

University of Queensland - Faculty of Business, Economics and Law ( email )

4072 Brisbane, Queensland
Australia

Financial Research Network (FIRN)

C/- University of Queensland Business School
St Lucia, 4071 Brisbane
Queensland
Australia

Suntharee Lhaopadchan (Contact Author)

Kasetsart University - Faculty of Management Sciences ( email )

199 Sukhumvit Road
Thungsukhla
Siracha, Chonburi 20230
Thailand

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