Market-moving events and their role in portfolio optimization of generations X, Y, and Z

Małgorzata Iwanicz-Drozdowska, Rogowicz Karol and Smaga Paweł
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Rogowicz Karol: Collegium of Management and Finance, SGH Warsaw School of Economics, Warsaw, Poland
Smaga Paweł: Collegium of Management and Finance, SGH Warsaw School of Economics, Warsaw, Poland

International Journal of Management and Economics, 2023, vol. 59, issue 4, 371-397

Abstract: We examine how generations X, Y, and Z might react to market-moving events over short- and long-term horizons to maintain an optimal balance among risk, return, and investor preferences. To analyze various portfolio variants, we use data on selected global assets and several types of economic and non-economic events for 2000-2021H1, applying the mean-variance optimization procedure. According to our results, in optimal portfolios, fixed-income assets dominate and are the main driver of portfolio adjustments. Portfolios with short-term horizons with less risk-averse investors and those for generation Z are the most reactive to analyzed types of events. None of the events per se creates an extraordinary opportunity to increase returns. However, expansionary monetary policy generates the greatest potential for incremental returns. Our findings provide practical implications for investors on how to adjust their portfolios in response to significant market events.

Keywords: market events; risk aversion; portfolio management; portfolio vulnerability (search for similar items in EconPapers)
JEL-codes: F21 G11 G15 (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:vrs:ijomae:v:59:y:2023:i:4:p:371-397:n:2

DOI: 10.2478/ijme-2024-0001

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