Achieving Portfolio Diversification for Individuals with Low Financial Sustainability
While many individuals make investments to gain financial stability, most individual investors hold under-diversified portfolios that consist of only a few financial assets. Lack of diversification is alarming especially for average individuals because it may result in massive drawdowns in their por...
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| Veröffentlicht in: | Sustainability 2020-09, Vol.12 (17), p.7073 |
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| creator | Lee, Yongjae Kim, Woo Chang Kim, Jang Ho |
| description | While many individuals make investments to gain financial stability, most individual investors hold under-diversified portfolios that consist of only a few financial assets. Lack of diversification is alarming especially for average individuals because it may result in massive drawdowns in their portfolio returns. In this study, we analyze if it is theoretically feasible to construct fully risk-diversified portfolios even for the small accounts of not-so-rich individuals. In this regard, we formulate an investment size constrained mean-variance portfolio selection problem and investigate the relationship between the investment amount and diversification effect. |
| doi_str_mv | 10.3390/su12177073 |
| format | Article |
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| ispartof | Sustainability, 2020-09, Vol.12 (17), p.7073 |
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| language | eng |
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| source | MDPI - Multidisciplinary Digital Publishing Institute; EZB Electronic Journals Library |
| subjects | Automation Diversification Institutional investments Investment Investment policy Literature reviews Optimization Portfolio management Portfolios Securities markets Stock exchanges Stock prices Sustainability |
| title | Achieving Portfolio Diversification for Individuals with Low Financial Sustainability |
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