Resource title

International diversification at home and abroad

Resource image

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Resource description

We analyze foreigners' and domestic institutional investors' positions in U.S. equities. Controlling for many factors, we uncover a common preference for large firms and firms that are diversified internationally. The domestic preference for internationally diversified firms implies that investors might obtain substantial international diversification by investing at home. Using an international factor model, we show that exposure to foreign equity markets is indeed greater for domestic firms that are more diversified internationally, suggesting that at least some of the home-grown foreign exposure translates into international diversification benefits. After accounting for home-grown foreign exposure, the share of "foreign" equities in investors' portfolios nearly doubles, reducing (but not eliminating) the observed home bias.

Resource author

Fang Cai, Francis E. Warnock

Resource publisher

Resource publish date

Resource language

eng

Resource content type

text/html

Resource resource URL

http://hdl.handle.net/10419/19514

Resource license

Adapt according to the presented license agreement and reference the original author.