What Australian investors need to know: To Diversity their portfolios

Alexeev, V; Tapon, F

What Australian investors need to know: To Diversity their portfolios

Alexeev, V

Tapon, F

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Publication Type:: Journal Article
Citation:: JASSA, 2013, 2013 (4), pp. 14 - 20
Issue Date:: 2013-01-01

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Field	Value	Language
dc.contributor.author	Alexeev, V https://orcid.org/0000-0003-3092-2500	en_US
dc.contributor.author	Tapon, F	en_US
dc.date.issued	2013-01-01	en_US
dc.identifier.citation	JASSA, 2013, 2013 (4), pp. 14 - 20	en_US
dc.identifier.issn	0313-5934	en_US
dc.identifier.uri	http://hdl.handle.net/10453/117055
dc.description.abstract	An ASIC survey in 2008 showed that Australian investors do not diversify their portfolios sufficiently, with the average investor holding only 2.19 securities. To study this issue, we simulate portfolios using daily observations for all traded and delisted equities in Australia between 1975 and 2011. We calculate two measures of risk, including heavy tailed distributions to account for extreme events. For each risk measure, we recommend the number of portfolio holdings that result in a 90 per cent reduction in diversifiable risk for an average and a more conservative investor. We find that, on average, 24 to 30 stocks are sufficient to attain a well-diversified portfolio.	en_US
dc.relation.ispartof	JASSA	en_US
dc.title	What Australian investors need to know: To Diversity their portfolios	en_US
dc.type	Journal Article
utslib.citation.volume	4	en_US
utslib.citation.volume	2013	en_US
utslib.for	1501 Accounting, Auditing and Accountability	en_US
utslib.for	1502 Banking, Finance and Investment	en_US
utslib.for	1801 Law	en_US
pubs.embargo.period	Not known	en_US
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Finance Discipline
utslib.copyright.status	open_access
pubs.issue	4	en_US
pubs.publication-status	Published	en_US
pubs.volume	2013	en_US

Abstract:

An ASIC survey in 2008 showed that Australian investors do not diversify their portfolios sufficiently, with the average investor holding only 2.19 securities. To study this issue, we simulate portfolios using daily observations for all traded and delisted equities in Australia between 1975 and 2011. We calculate two measures of risk, including heavy tailed distributions to account for extreme events. For each risk measure, we recommend the number of portfolio holdings that result in a 90 per cent reduction in diversifiable risk for an average and a more conservative investor. We find that, on average, 24 to 30 stocks are sufficient to attain a well-diversified portfolio.

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http://hdl.handle.net/10453/117055