Project Management

U.S. International Equity Investment And Past Prospective Returns

Download Now Date Added: Feb 2011
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Counter to extant stylized facts, using newly available data on country allocations in U.S. investors' foreign equity portfolios the authors find that U.S. investors do not exhibit returns-chasing behavior, but, consistent with partial portfolio rebalancing, tend to sell past winners; and U.S. investors increase portfolio weights on a country's equity market just prior to its strong performance, behavior inconsistent with an informational disadvantage. Over the past two decades, U.S. investors' foreign equity portfolios outperformed a value-weighted foreign benchmark by 160 basis points per year.