No. 1060 - The impact of US hurricanes on the portfolio decisions of Italian and Dutch institutional investors
This study analyses how Italian and Dutch institutional investors, who are exposed to greater information asymmetries than their US counterparts, adjust their investments in US companies in the wake of hurricanes. The analysis covers Italian and Dutch pension funds, insurance companies and non-money market investment funds, and considers both equity and bond investments, distinguishing by type of investor and country.
US firms affected by hurricanes experience a decline in both equity and bond returns. US investors divest rapidly from affected firms. The response of European investors is more limited and heterogeneous: Italian investors only marginally adjust their portfolios, while Dutch investors - who are more exposed to vulnerable sectors and more familiar with these risks - reduce their equity holdings in affected firms while increasing their bond holdings. Mutual funds are the most responsive investors, whereas pension funds are the most stable.
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