Retail Investing in Passive Exchange Traded Funds
(2020) 6th International Symposium in Computational Economics and Finance ISCEF 2020 — Location: Online (Paris) (2.April.2020)
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- Abstract
- Using a large set of trading accounts, we study the determinants of retail investing in passive Exchange Traded Funds (P-ETFs). Controlling for investor characteristics related to their risk-return profile, trading activity, and socio-demographics, we show that the probability and magnitude of P-ETF investing by retail investors can be explained by financial knowledge, financial experience, and behavioral biases such as overconfidence and local bias. We also show that the more active P-ETF users hold a lower number of stocks and modify the composition of their stock portfolio less extensively, pointing to a substitution effect between stocks and P-ETFs.
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Citations
El Hichou El Maya, Y., D’Hondt, C., & Petitjean, M. (2020). Retail Investing in Passive Exchange Traded Funds. 6th International Symposium in Computational Economics and Finance ISCEF 2020, Online (Paris). https://hdl.handle.net/2078.5/108661