Foreign Market Portfolio Concentration and Performance

Financial Management, Forthcoming

38 Pages Posted: 4 Nov 2020

Date Written: February 1, 2019


Using security holdings of 49,857 foreign investors on the Oslo Stock Exchange (OSE), I test whether concentrated investment strategies in international markets result in excess risk-adjusted returns. I find that investors with higher learning capacity increase returns, while investors with lower learning capacity decrease returns from the portfolio concentration. I measure learning capacity as institutional classification, geographical proximity to Norway, and cultural closeness to Norwegian investors (as based on the Hofstede cultural closeness measures). I conclude, consistent with the information advantage theory, that concentrated investment strategies in foreign markets can be optimal (disastrous) for investors with higher (lower) learning capacity.

Keywords: Retail Investors, International Investments, Portfolio Choice

JEL Classification: G11, G14, G15

Suggested Citation

Fjesme, Sturla Lyngnes, Foreign Market Portfolio Concentration and Performance (February 1, 2019). Financial Management, Forthcoming, Available at SSRN: or

Sturla Lyngnes Fjesme (Contact Author)

Oslo Business School ( email )

P.O. Box 4
Oslo, 0130


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