Should your bank invest for you? Evidence from private banking accounts

Ji Cao, Marcel Fischli and Marc Oliver Rieger

Journal of Behavioral and Experimental Finance, 2017, vol. 13, issue C, 1-8

Abstract: We analyze a large dataset of private banking portfolios in Switzerland of a major bank with the unique feature that parts of the portfolios were managed by the bank, parts were advisory portfolios. To correct the heterogeneity of individual investors, we apply a mixture model and a cluster analysis. Our results suggest that there is indeed a substantial group of advised individual investors that outperforms the bank-managed portfolios, at least after fees. However, a simple passive strategy that invests in the MSCI World and a risk-free asset significantly outperforms both the better advisory and the bank-managed portfolios.

Keywords: Individual investor; Portfolio management; Private banking; Mixture model; Cluster analysis (search for similar items in EconPapers)
JEL-codes: C16 G11 (search for similar items in EconPapers)
Date: 2017
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Persistent link: https://EconPapers.repec.org/RePEc:eee:beexfi:v:13:y:2017:i:c:p:1-8

DOI: 10.1016/j.jbef.2016.11.001

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