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Unit Trusts in Singapore: Degree of Diversification

Author

Listed:
  • James Chong

    (James Chong, 60 Mimosa Walk, Singapore 807906, The Republic of Singapore.)

  • Chow Kiat Lim

    (The Government of Singapore Investment Corporation)

  • Ee Toh Chia

    (Schroder Investment Management (Singapore) Pte Ltd)

Abstract

This study examines the degree of diversification of the funds in Singapore. The R-square statistic was employed as a measure for the degree of diversification. The findings generally indicated that the local funds were not well-diversified. Various explanations are given to account for this low level of diversification, as indicated by a low R-square statistic. This study also addresses some definitional and conceptual issues relating to diversification that affect the propriety of using the R-square statistic as a measure of diversification. More specifically, Markowitz’s Modern Portfolio Theory is introduced to illustrate the difference between naive and efficient diversification.

Suggested Citation

  • James Chong & Chow Kiat Lim & Ee Toh Chia, 1997. "Unit Trusts in Singapore: Degree of Diversification," Journal of Interdisciplinary Economics, , vol. 8(3), pages 177-185, July.
    • Handle: RePEc:sae:jinter:v:8:y:1997:i:3:p:177-185
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