Individual Investor Activity and Performance
University of St. Gallen, School of Finance Research Paper No. 2014/8
Forthcoming in Review of Financial Studies
52 Pages Posted: 7 May 2014 Last revised: 16 Sep 2016
There are 5 versions of this paper
Individual Investor Activity and Performance
Individual Investor Activity and Performance
Individual Investor Activity and Performance
Individual Investor Activity and Performance
Individual Investor Activity and Performance
Date Written: May 31, 2016
Abstract
We examine the daily activity and performance of a large panel of individual investors in Sweden's Premium Pension System. We find that active investors earn higher returns and risk-adjusted returns than inactive investors. A performance decomposition analysis reveals that most of the outperformance of active investors is the result of these investors successfully timing mutual funds and asset classes. While activity is beneficial for some investors, extreme flows out of mutual funds affect funds' net asset values negatively for all investors. Financial advisors, by contributing to coordinate investments and redemptions, exacerbate these negative effects.
Keywords: 401(k), coordinated fund changes, defined contribution, financial advisors, mutual fund flows
JEL Classification: G11, G23, H55
Suggested Citation: Suggested Citation
Do you have a job opening that you would like to promote on SSRN?
Recommended Papers
-
Financial Advisors: A Case of Babysitters?
By Andreas Hackethal, Michael Haliassos, ...
-
Financial Advisors: A Case of Babysitters?
By Andreas Hackethal, Michael Haliassos, ...
-
Financial Advisors: A Case of Babysitters?
By Andreas Hackethal, Michael Haliassos, ...
-
The Market for Financial Advice: An Audit Study
By Sendhil Mullainathan, Markus Noeth, ...
-
Legal Protection in Retail Financial Markets
By Bruce I. Carlin and Simon Gervais
-
Legal Protection in Retail Financial Markets
By Bruce I. Carlin and Simon Gervais
-
Is Unbiased Financial Advice To Retail Investors Sufficient? Answers from a Large Field Study
By Utpal Bhattacharya, Andreas Hackethal, ...
-
Is Unbiased Financial Advice to Retail Investors Sufficient? Answers from a Large Field Study
By Utpal Bhattacharya, Andreas Hackethal, ...
-
Financial Advice and Individual Investor Portfolio Performance
By Marc Kramer