How Should Individual Investors Diversify? : An Empirical Evaluation of Alternative Asset Allocation Policies

Jacobs, Heiko ; Müller, Sebastian ; Weber, Martin

Document Type: Article
Year of publication: 2014
The title of a journal, publication series: Journal of Financial Markets
Volume: 19
Page range: 62-85
Place of publication: Amsterdam [u.a.]
Publishing house: Elsevier
ISSN: 1386-4181
Publication language: English
Institution: Business School > ABWL u. Finanzwirtschaft, insbes. Bankbetriebslehre (Weber 1993-2017)
Subject: 330 Economics
Classification: JEL: G11,
Keywords (English): Portfolio theory ; Household finance ; Asset allocation ; International diversi fi cation ; Heuristics
Abstract: This paper evaluates numerous diversification strategies as a possible remedy against widespread costly investment mistakes of individual investors. Our results reveal that a very broad range of simple heuristic allocation schemes offers similar diversifi cation gains as well-established or recently developed portfolio optimization approaches. This holds true for both international diversi fication in the stock market and diversification over different asset classes. We thus suggest easy-to-implement allocation guidelines for individual investors.

Dieser Eintrag ist Teil der Universitätsbibliographie.

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