Keep Calm and Do Nothing - Trading Behavior of Swedish Retirement Investors during the COVID-19 Pandemic

13 Pages Posted: 2 Feb 2021

See all articles by Johannes Hagen

Johannes Hagen

Jönköping University; Netspar

Amedeus Malisa

Jonkoping University - Jonkoping International Business School (JIBS)

Thomas Post

Maastricht University - School of Business and Economics - Department of Finance; Netspar

Date Written: January 28, 2021

Abstract

How did investors in the Swedish Premium Pension System (PPS) react to the stock markets shock ignited in 2020 by the COVID-19 pandemic? The share of investors that traded more than doubled, and trades shifted capital from equity funds to low risk interest funds. In economic terms, however, trading activity stayed at very low levels—less than two percent of investors traded in March 2020 and there was no effect on pension withdrawals. Given the vast evidence on retail investors’ strongly increasing trading volume in crisis times, the reaction of PPS investors looks surprisingly smart, i.e., avoiding the many mistakes that investors incur when they try to outsmart the market. Potentially, the often-criticized choice architecture of the PPS that induces strong inertia provided positive side effects in times of a severe market shock.

Keywords: Financial crisis, COVID-19 pandemic, Retirement investors, Trading behavior, Risk-taking behavior

JEL Classification: D14, D81, G01, G11, G28

Suggested Citation

Hagen, Johannes and Malisa, Amedeus and Post, Thomas, Keep Calm and Do Nothing - Trading Behavior of Swedish Retirement Investors during the COVID-19 Pandemic (January 28, 2021). Available at SSRN: https://ssrn.com/abstract=3775036

Johannes Hagen (Contact Author)

Jönköping University ( email )

Gjuterigatan 5
Jönköping, 553 18
Sweden

HOME PAGE: http://www.johanneshagen.com

Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

Amedeus Malisa

Jonkoping University - Jonkoping International Business School (JIBS) ( email )

Jönköping, 55111
Sweden

Thomas Post

Maastricht University - School of Business and Economics - Department of Finance ( email )

Tongersestraat 53
Maastricht, 6200 MD
Netherlands
+31 43 38 83899 (Phone)
+31 43 38 84875 (Fax)

HOME PAGE: http://www.thomas-post.com

Netspar ( email )

P.O. Box 90153
Tilburg, 5000 LE
Netherlands

HOME PAGE: http://www.netspar.nl

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