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What Australian Investors need to know to diversify their portfolios
Citation
Alexeev, V and Tapon, F, What Australian Investors need to know to diversify their portfolios, JASSA, (4) pp. 14-20. ISSN 0313-5934 (2013) [Refereed Article]
Copyright Statement
Copyright 2013 Finsia
Official URL: https://www.finsia.com/indepth/publications/jassa
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.
Item Details
Item Type: | Refereed Article |
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Research Division: | Commerce, Management, Tourism and Services |
Research Group: | Banking, finance and investment |
Research Field: | Investment and risk management |
Objective Division: | Commercial Services and Tourism |
Objective Group: | Financial services |
Objective Field: | Investment services (excl. superannuation) |
UTAS Author: | Alexeev, V (Dr Vitali Alexeev) |
ID Code: | 88759 |
Year Published: | 2013 |
Deposited By: | Economics and Finance |
Deposited On: | 2014-02-14 |
Last Modified: | 2014-11-04 |
Downloads: | 0 |
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