TY - JOUR
T1 - The performance of undiversified portfolio in Indonesia stock exchange
AU - Frensidy, Budi
N1 - Publisher Copyright:
© by author(s); CC-BY.
PY - 2016/7/1
Y1 - 2016/7/1
N2 - This research is aimed to analyze the diversification practice among domestic retail investors at the Indonesia Stock Exchange (IDX) and its portfolio performance. An individual domestic investor at IDX holds 4.3 stocks on average with the median two stocks. This is far from the minimum number of stocks required for the diversification purpose. But, this finding is in line with the findings of Goetzmann & Kumar (2008), Kelly (1995), and Polkovnichenko (2005). For the performance, without considering risk, minimum diversification with five stocks or fewer and moderate diversification with six to ten stocks in the portfolios tend to be better than the extensive diversification. However, when risk is taken into account, the undiversified portfolios do not outperform the extensive diversification.
AB - This research is aimed to analyze the diversification practice among domestic retail investors at the Indonesia Stock Exchange (IDX) and its portfolio performance. An individual domestic investor at IDX holds 4.3 stocks on average with the median two stocks. This is far from the minimum number of stocks required for the diversification purpose. But, this finding is in line with the findings of Goetzmann & Kumar (2008), Kelly (1995), and Polkovnichenko (2005). For the performance, without considering risk, minimum diversification with five stocks or fewer and moderate diversification with six to ten stocks in the portfolios tend to be better than the extensive diversification. However, when risk is taken into account, the undiversified portfolios do not outperform the extensive diversification.
KW - Diversification practice
KW - Portfolio performance
KW - Retail investor
KW - Undiversified portfolio
UR - http://www.scopus.com/inward/record.url?scp=84976605993&partnerID=8YFLogxK
U2 - 10.19030/jabr.v32i4.9720
DO - 10.19030/jabr.v32i4.9720
M3 - Article
AN - SCOPUS:84976605993
SN - 0892-7626
VL - 32
SP - 1041
EP - 1048
JO - Journal of Applied Business Research
JF - Journal of Applied Business Research
IS - 4
ER -