Purpose – The purpose of this paper is to examine the performance and diversification value of water-related funds. As pollution, climate change and accelerated population growth threaten water resources worldwide, such resources have become a sought-after asset. For most investors, it is impractical to physically hold water as part of a portfolio; therefore, an open question is how to better gain exposure to this asset. The authors propose a look at water-related mutual funds, an issue not found addressed in the literature. In addition to the investment potential of these funds, investors might be drawn to them as part of a more comprehensive socially responsible agenda. Design/methodology/approach – In the present study, the authors identify and measure the risk-adjusted performance and diversification value of open-end funds dedicated to investments in water-related securities. Jensen’s alpha is used to measure risk-adjusted performance, whereas diversification value is examined by implementing a methodology widely used in the mutual fund literature. Findings – Consistent with previous studies on the performance of ethical or socially responsible mutual funds, the authors found that their sample of water-related mutual funds neither outperform nor underperform two benchmarks. However, the authors also found that they offer potential diversification gains for international mutual funds’ portfolios. Research limitations/implications – Open-end water-related mutual funds have only been recently created, and currently, very few funds are available to investors. These facts limit the sample size and the length of the return series examined. Originality/value – The authors have not found a paper that examines the performance and diversification value of water-related mutual funds. These funds present themselves as a practical way for individual investors to gain exposure to the commodity of water.

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The traditional time series methodology requires at least a preliminary transformation of the data to get stationarity. On the other hand, robust Bayesian dynamic models (RBDMs) do not assume a regular pattern or stability of the underlying system but can include points of statement breaks. In this paper we use RBDMs in order to account possible outliers and structural breaks in Latin-American economic time series. We work with important economic time series from Puerto Rico and Mexico. We show by using a random walk model how RBDMs can be applied for detecting historic changes in the economic inflation of Mexico. Also, we model the Consumer Price Index, the Economic Activity Index and the total number of employments economic time series in Puerto Rico using local linear trend and seasonal RBDMs with observational and states variances. The results illustrate how the model accounts the structural breaks for the historic recession periods in Puerto Rico.Keywords Robust Bayesian dynamic model Á Outliers and structural breaks Á Latin-American time series Á Consumer Price Index Á Economic Activity Index Á Total number of employments JEL Classification C11 Á C40 Á G17 Á N16

The asset allocation decisions of individual investors are evaluated using survey data. By applying a methodology based on attribution returns we are able to assess the forecasting ability of a group of well-informed individual investors. We find that, if this group of investors follows their survey answers with investment actions, they add value to their overall wealth by actively managing their portfolios. These investors demonstrate good forecasting ability by effectively shifting their portfolios allocations. Finally, using two different time partitions, based on the general state of the stock market, we find that this group of investors managed their portfolios better during poor market conditions.

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