Equity Home-Bias : A Suboptimal Choice for UK Investors?

In spite of the popularity of international portfolio diversification theory, extant empirical literature shows that investors prefer domestic assets and as a result, many studies argue that investors' portfolios are largely suboptimal. This paper examines whether British investors need to dive...

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Main Authors:	Antoniou, Antonios, Olusi, Olasupo, Paudyal, Krishna
Format:	Journal Article
Language:	EN
Published:	2012
Subjects:	Portfolio Choice Investment Decisions G110 International Financial Markets G150
Online Access:	http://hdl.handle.net/10986/4615

id	okr-10986-4615
recordtype	oai_dc
spelling	okr-10986-46152021-04-23T14:02:18Z Equity Home-Bias : A Suboptimal Choice for UK Investors? Antoniou, Antonios Olusi, Olasupo Paudyal, Krishna Portfolio Choice Investment Decisions G110 International Financial Markets G150 In spite of the popularity of international portfolio diversification theory, extant empirical literature shows that investors prefer domestic assets and as a result, many studies argue that investors' portfolios are largely suboptimal. This paper examines whether British investors need to diversify their portfolios internationally to gain performance benefits from international markets or can they obtain these benefits by mimicking the portfolios with domestically traded assets. The results confirm that it is possible to mimic the performance of foreign equity with domestic equity. Indeed, the pay-offs from homemade portfolios outperform those from international portfolios regardless of the periodic variation in the overall performance of the UK market vis-a-vis foreign markets. The superiority of homemade portfolio is more prominent in recent years and is enhanced by the increased internationalisation of developed capital markets. Therefore, investors' home bias is not suboptimal. 2012-03-30T07:28:50Z 2012-03-30T07:28:50Z 2010 Journal Article European Financial Management 13547798 http://hdl.handle.net/10986/4615 EN http://creativecommons.org/licenses/by-nc-nd/3.0/igo World Bank Journal Article United Kingdom
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	EN
topic	Portfolio Choice Investment Decisions G110 International Financial Markets G150
spellingShingle	Portfolio Choice Investment Decisions G110 International Financial Markets G150 Antoniou, Antonios Olusi, Olasupo Paudyal, Krishna Equity Home-Bias : A Suboptimal Choice for UK Investors?
geographic_facet	United Kingdom
relation	http://creativecommons.org/licenses/by-nc-nd/3.0/igo
description	In spite of the popularity of international portfolio diversification theory, extant empirical literature shows that investors prefer domestic assets and as a result, many studies argue that investors' portfolios are largely suboptimal. This paper examines whether British investors need to diversify their portfolios internationally to gain performance benefits from international markets or can they obtain these benefits by mimicking the portfolios with domestically traded assets. The results confirm that it is possible to mimic the performance of foreign equity with domestic equity. Indeed, the pay-offs from homemade portfolios outperform those from international portfolios regardless of the periodic variation in the overall performance of the UK market vis-a-vis foreign markets. The superiority of homemade portfolio is more prominent in recent years and is enhanced by the increased internationalisation of developed capital markets. Therefore, investors' home bias is not suboptimal.
format	Journal Article
author	Antoniou, Antonios Olusi, Olasupo Paudyal, Krishna
author_facet	Antoniou, Antonios Olusi, Olasupo Paudyal, Krishna
author_sort	Antoniou, Antonios
title	Equity Home-Bias : A Suboptimal Choice for UK Investors?
title_short	Equity Home-Bias : A Suboptimal Choice for UK Investors?
title_full	Equity Home-Bias : A Suboptimal Choice for UK Investors?
title_fullStr	Equity Home-Bias : A Suboptimal Choice for UK Investors?
title_full_unstemmed	Equity Home-Bias : A Suboptimal Choice for UK Investors?
title_sort	equity home-bias : a suboptimal choice for uk investors?
publishDate	2012
url	http://hdl.handle.net/10986/4615
_version_	1764392130377154560

Equity Home-Bias : A Suboptimal Choice for UK Investors?

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