Portfolio Choice in Mexico

Journal of Behavioral and Experimental Finance, 16, 2017, 1-13

37 Pages Posted: 2 Oct 2017 Last revised: 25 Jan 2018

See all articles by Alex R. Horenstein

Alex R. Horenstein

University of Miami - School of Business Administration - Department of Economics

Avichai Snir

Bar Ilan University - Department of Economics

Date Written: August 4, 2017

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.

Keywords: Portfolio Choice, Financial Advice, Motivated Assets, Home Bias, Emerging Markets

JEL Classification: G10, G11, G15

Suggested Citation

Horenstein, Alex R. and Snir, Avichai, Portfolio Choice in Mexico (August 4, 2017). Journal of Behavioral and Experimental Finance, 16, 2017, 1-13. Available at SSRN: https://ssrn.com/abstract=3045185 or http://dx.doi.org/10.2139/ssrn.3045185

Alex R. Horenstein (Contact Author)

University of Miami - School of Business Administration - Department of Economics ( email )

P.O. Box 248126
Coral Gables, FL 33124-6550
United States

Avichai Snir

Bar Ilan University - Department of Economics ( email )

Ramat-Gan, 52900
Israel
+972 3 736 0835 (Phone)
+972 3 535 3180 (Fax)

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