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

Author

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  • Cao, Ji
  • Fischli, Marcel
  • Rieger, Marc Oliver

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.

Suggested Citation

  • Cao, Ji & Fischli, Marcel & Rieger, Marc Oliver, 2017. "Should your bank invest for you? Evidence from private banking accounts," Journal of Behavioral and Experimental Finance, Elsevier, vol. 13(C), pages 1-8.
    • Handle: RePEc:eee:beexfi:v:13:y:2017:i:c:p:1-8
    DOI: 10.1016/j.jbef.2016.11.001
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    More about this item

    Keywords

    Individual investor; Portfolio management; Private banking; Mixture model; Cluster analysis;
    All these keywords.

    JEL classification:

    • C16 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Econometric and Statistical Methods; Specific Distributions
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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