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Discussion Paper Details

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Title: Individual Investor Activity and Performance

Author(s): Magnus Dahlquist, José Vicente Martinez and Paul Söderlind

Publication Date: January 2012

Keyword(s): 401(k), Coordinated fund changes, Financial advisors and Fire sales

Programme Area(s): Financial Economics

Abstract: We examine the activity and performance of a large panel of individual investors (approximately 70,000 investors and their daily returns over the 2000 to 2010 period) in Sweden's Premium Pension System. We document strong inertia in individuals' choices and changes of mutual funds. We find that active investors outperform passive investors, and that there is a causal effect of fund changes on performance. The outperformance is primarily the result of dynamic fund selection. Activity is beneficial for the individual investor, whereas extreme flows out of mutual funds (which we attribute to financial advisors) affect funds' net asset value negatively for all investors.

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Bibliographic Reference

Dahlquist, M, Martinez, J and Söderlind, P. 2012. 'Individual Investor Activity and Performance'. London, Centre for Economic Policy Research. https://cepr.org/active/publications/discussion_papers/dp.php?dpno=8744