Economics, Econometrics and Finance
4 years ago

Investors can boost returns by delegating wealth allocation to portfolio managers.

SSRN Electronic Journal
Portfolio Selection with Mental Accounts and Delegation
Gordon J. Alexander, Alexandre M. Baptista

Paper Summary

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The article explores how investors manage their portfolios using mental accounts and delegation to portfolio managers. The researchers analyze how optimal portfolios are selected within these accounts and the overall portfolio. They find that under certain conditions, these portfolios may or may not be on the mean-variance frontier. Additionally, they show that their analytical approach improves upon previous numerical methods.