Individual Investor Activity and Performance

Magnus Dahlquist (), Jose Vincente Martinez () and Paul Söderlind

No 1408, Working Papers on Finance from University of St. Gallen, School of Finance

Abstract: 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.

Keywords: 401(k); coordinated fund changes; defined contribution; financial advisors; mutual fund flows (search for similar items in EconPapers)
JEL-codes: G11 G23 H55 (search for similar items in EconPapers)
Pages: 51 pages
Date: 2014-03, Revised 2016-09
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

Forthcoming in Review of Financial Studies

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http://ux-tauri.unisg.ch/RePEc/usg/sfwpfi/WPF-1408.pdf (application/pdf)

Related works:
Journal Article: Individual Investor Activity and Performance (2017)
Working Paper: Individual Investor Activity and Performance (2012)
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Persistent link: https://EconPapers.repec.org/RePEc:usg:sfwpfi:2014:08

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