Hava Orkut, associate professor at EMSBS, recently published an article in volume 42 of the academic journal Finance (CNRS cat. 2, FNEGE cat. 2).
The article is entitled “Foreign Stock Investment and Sophistication of French Retail Investors.”
Based on the MiFID questionnaire answers and banking records of around 7,000 retail investors, we assume that foreign investors (F-investors), who directly invest in foreign stocks, are more sophisticated than domestic investors (D-investors). After a matching, we show that stocks and warrants are more diversified in F-investors’ portfolios, while mutual funds, bonds, unit-linked life insurance products and retirement plans are more diversified in those of D-investors. These sophisticated F-investors are more risk tolerant, less sensitive to losses and more financially literate, but exhibit a home bias.