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

79 Pages Posted: 8 Jun 2015

See all articles by Geert Bekaert

Geert Bekaert

Columbia Business School - Finance and Economics

Kenton Hoyem

Financial Engines, Inc.

Wei-Yin Hu

Financial Engines, Inc.

Enrichetta Ravina

Federal Reserve Bank of Chicago; Center for Economic Policy Research (CEPR); European Corporate Governance Institute (ECGI)

Date Written: June 2015

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

Bekaert, Geert and Hoyem, Kenton and Hu, Wei-Yin and Ravina, Enrichetta, Who is Internationally Diversified? Evidence from 296 401(K) (June 2015). NBER Working Paper No. w21236, Available at SSRN: https://ssrn.com/abstract=2615642

Geert Bekaert (Contact Author)

Columbia Business School - Finance and Economics ( email )

3022 Broadway
New York, NY 10027
United States

Kenton Hoyem

Financial Engines, Inc. ( email )

1804 Embarcadero Road
Palo Alto, CA 94303
United States

Wei-Yin Hu

Financial Engines, Inc. ( email )

1050 Enterprise Way, 3rd Floor
Sunnyvale, CA 94089
United States

Enrichetta Ravina

Federal Reserve Bank of Chicago ( email )

230 South LaSalle Street
Chicago, IL 60604
United States

HOME PAGE: http://https://sites.google.com/view/eravina/research

Center for Economic Policy Research (CEPR) ( email )

33 Great Sutton Street
London
United Kingdom

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
Brussels
Belgium

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