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Households and mutual fund investments: Individual characteristics of investors behaving like contrarians
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management, Banking and Finance. KTH, School of Architecture and the Built Environment (ABE), Centres, Centre for Banking and Finance, Cefin.
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management, Banking and Finance. KTH, School of Architecture and the Built Environment (ABE), Centres, Centre for Banking and Finance, Cefin.
KTH, School of Architecture and the Built Environment (ABE), Real Estate and Construction Management, Building and Real Estate Economics. KTH, School of Architecture and the Built Environment (ABE), Centres, Centre for Banking and Finance, Cefin.
2017 (English)In: Journal of Behavioral and Experimental Finance, ISSN 2214-6350, E-ISSN 2214-6369, Vol. 15, 28-37 p.Article in journal (Refereed) Published
Abstract [en]

We investigate characteristics of household investors stating they would increase shares in a mutual fund in a situation where this fund has exhibited a negative past performance. Hence, we investigate characteristics of investors behaving lite contrarians. We use a survey methodology to examine the effects of risk tolerance, perceived competence, and of being informed on households’ contrarian behavior. To investigate the stability of these characteristics we test our hypothesis in three scenarios: (1) scenario without consideration of market conditions, (2) bull market scenario, and (3) bear market scenario. Findings show that risk tolerance and perceived competence leads to a contrarian buying behavior. The results show that these effects are significant also in bull and bear markets, thus that these characteristics are stable. The findings further show that being informed explains contrarian buying behavior only when no consideration is given to current market conditions. Thus, this characteristic could be considered unstable.

Place, publisher, year, edition, pages
Elsevier, 2017. Vol. 15, 28-37 p.
Keyword [en]
Contrarian buying behavior, Households, Mutual fund investor, Perceived competence, Risk tolerance
National Category
Economics and Business
Identifiers
URN: urn:nbn:se:kth:diva-212240DOI: 10.1016/j.jbef.2017.07.002Scopus ID: 2-s2.0-85026482612OAI: oai:DiVA.org:kth-212240DiVA: diva2:1134009
Funder
VINNOVA, 2012-04069
Note

QC 20170817

Available from: 2017-08-17 Created: 2017-08-17 Last updated: 2017-08-17Bibliographically approved

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