Asymmetric Information, Portfolio Managers, and Home Bias

Wioletta Dziuda and Jordi Mondria ()

Working Papers from University of Toronto, Department of Economics

Abstract: We propose a model of delegated asset management in which individual investors are more informed about the domestic market than the foreign market and face uncertainty about quality of portfolio managers. The model shows that asymmetric information of individual investors results in home bias even if professional fund managers are equally well informed about all markets. Additionally, the model generates predictions about the size and the quality of mutual funds that are consistent with empirical studies: there are fewer mutual funds investing domestically, but their quality and market value are higher.

Keywords: Asymmetric Information; Portfolio Managers; and Home Bias (search for similar items in EconPapers)
JEL-codes: D82 F30 G11 (search for similar items in EconPapers)
Pages: 41 pages
Date: 2010-02-12
New Economics Papers: this item is included in nep-cta and nep-ifn
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Citations: View citations in EconPapers (9)

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Related works:
Journal Article: Asymmetric Information, Portfolio Managers, and Home Bias (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:tor:tecipa:tecipa-393

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