McKinsey & Company
Institutional Affiliation: Financial Engines, Inc.
NBER Working Papers and Publications
|June 2015||Who is Internationally Diversified? Evidence from 296 401(k)|
with , , : w21236
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.
Published: Geert Bekaert, Kenton Hoyem, Wei-Yin Hu, Enrichetta Ravina, Who is internationally diversified? Evidence from the 401(k) plans of 296 firms, Journal of Financial Economics, Volume 124, Issue 1, 2017, Pages 86-112, ISSN 0304-405X, https://doi.org/10.1016/j.jfineco.2016.12.010.