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The effect of age on portfolio choices: evidence form an Italian pension fund

Author

Listed:
  • Giuseppe Cappelletti

    (Bank of Italy)

  • Giovanni Guazzarotti

    (Bank of Italy)

  • Pietro Tommasino

    (Bank of Italy)

Abstract

Optimal Portfolio Theory prescribes that investors reduce their exposure to financial market risk as they get near to retirement. To assess the effect of ageing on portfolio choices, we study the case of an Italian defined contribution pension fund during the period 2002-08. We find that on average the willingness to hold risky assets does indeed significantly decrease with age, but we also document that inertial behaviour is quite widespread, and can be very costly.

Suggested Citation

  • Giuseppe Cappelletti & Giovanni Guazzarotti & Pietro Tommasino, 2010. "The effect of age on portfolio choices: evidence form an Italian pension fund," Temi di discussione (Economic working papers) 768, Bank of Italy, Economic Research and International Relations Area.
    • Handle: RePEc:bdi:wptemi:td_768_10
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    Cited by:

    1. Mitchell, O.S. & Piggott, J., 2016. "Workplace-Linked Pensions for an Aging Demographic," Handbook of the Economics of Population Aging, in: Piggott, John & Woodland, Alan (ed.), Handbook of the Economics of Population Aging, edition 1, volume 1, chapter 0, pages 865-904, Elsevier.

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    More about this item

    Keywords

    pension funds; portfolio choice;

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G23 - Financial Economics - - Financial Institutions and Services - - - Non-bank Financial Institutions; Financial Instruments; Institutional Investors

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