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Individual Investor Activity and Performance

Listed author(s):
  • Dahlquist, Magnus

    ()

  • Martinez, Jose Vincente

    ()

  • Soderlind, Paul

    ()

We examine the daily activity and performance of a large panel of individual investors in Sweden's Premium Pension System. We find that active investors earn higher returns and risk-adjusted returns than inactive investors. A performance decomposition analysis reveals that most of the outperformance of active investors is the result of these investors successfully timing mutual funds and asset classes. While activity is beneficial for some investors, extreme flows out of mutual funds affect funds' net asset values negatively for all investors. Financial advisors, by contributing to coordinate investments and redemptions, exacerbate these negative effects.

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File URL: http://ux-tauri.unisg.ch/RePEc/usg/sfwpfi/WPF-1408.pdf
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Paper provided by University of St. Gallen, School of Finance in its series Working Papers on Finance with number 1408.

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Length: 51 pages
Date of creation: Mar 2014
Date of revision: Sep 2016
Publication status: Forthcoming in Review of Financial Studies
Handle: RePEc:usg:sfwpfi:2014:08
Contact details of provider: Phone: +41 71 243 40 11
Fax: +41 71 243 40 40
Web page: http://www.unisg.ch/de/universitaet/schools/finance

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