Abstract

http://ssrn.com/abstract=568156
 
 

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Citations (17)



 


 



Portfolio Concentration and the Performance of Individual Investors


Zoran Ivkovich


Michigan State University, Department of Finance

Clemens Sialm


University of Texas at Austin - McCombs School of Business; National Bureau of Economic Research (NBER)

Scott J. Weisbenner


University of Illinois at Urbana-Champaign - Department of Finance; National Bureau of Economic Research (NBER)


AFA 2006 Boston Meetings
Journal of Financial and Quantitative Analysis, Forthcoming

Abstract:     
This paper tests whether information advantages help explain why some individual investors concentrate their stock portfolios in a few stocks. Stock investments made by households that choose to concentrate their brokerage accounts in a few stocks outperform those made by households with more diversified accounts (especially among those with large portfolios). Excess returns of concentrated relative to diversified portfolios are stronger for stocks not included in the S&P 500 index and local stocks, potentially reflecting concentrated investors' successful exploitation of information asymmetries. Controlling for households' average investment abilities, their trades and holdings perform better when their portfolios include fewer stocks.

Number of Pages in PDF File: 60

Keywords: Portfolio choice, concentration, diversification

JEL Classification: G11, G14

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Date posted: March 7, 2005  

Suggested Citation

Ivkovich, Zoran and Sialm, Clemens and Weisbenner, Scott J., Portfolio Concentration and the Performance of Individual Investors. AFA 2006 Boston Meetings; Journal of Financial and Quantitative Analysis, Forthcoming. Available at SSRN: http://ssrn.com/abstract=568156 or http://dx.doi.org/10.2139/ssrn.568156

Contact Information

Zoran Ivkovich
Michigan State University, Department of Finance ( email )
315 Eppley Center
East Lansing, MI 48824-1122
United States
Clemens Sialm (Contact Author)
University of Texas at Austin - McCombs School of Business ( email )
Austin, TX 78712
United States
HOME PAGE: http://faculty.mccombs.utexas.edu/Clemens.Sialm/
National Bureau of Economic Research (NBER)
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
Scott J. Weisbenner
University of Illinois at Urbana-Champaign - Department of Finance ( email )
340 Wohlers Hall, MC-706
1206 S. Sixth Street
Champaign, IL 61820
United States
217-333-0872 (Phone)
217-244-9867 (Fax)
HOME PAGE: http://business.illinois.edu/weisbenn/
National Bureau of Economic Research (NBER) ( email )
1050 Massachusetts Avenue
Cambridge, MA 02138
United States
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