Individual Investor Activity and Performance

Magnus Dahlquist, Jose Vicente Martinez and Paul Söderlind

The Review of Financial Studies, 2017, vol. 30, issue 3, 866-899

Abstract: We examine the daily activity and performance of a large panel of individual investors from Sweden’s Premium Pension System. We find that active investors earn higher returns and risk-adjusted returns than do inactive investors. A performance decomposition analysis reveals that most outperformance by active investors is the result of active 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.Received March 10, 2015; editorial decision September 8, 2016 by Editor Andrew Karolyi

JEL-codes: G11 G23 H55 (search for similar items in EconPapers)
Date: 2017
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Citations: View citations in EconPapers (10)

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Working Paper: Individual Investor Activity and Performance (2016)
Working Paper: Individual Investor Activity and Performance (2012)
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