Updated: Sep 19, 2021
We are happy to announce that our research team has successfully published another one of our research ideas. Prof. Plamen Patev, Phd and Kaloyan Petkov, PhD has published their paper "Risk-adjusted Breadth in Active portfolio management" in "International Journal of Business and Management Studies". The main idea of this research shows that there could be optimal number of assets in the active portfolio. Empirical section performed on the Taiwanese stock market shows that it is optimal to hold only 10-15 assets in your active portfolio. Patev and Petkov prove that risk diversification in active portfolio is not linear and at some point there is little benefit to risk management from including more assets. Moreover including more assets means that investor keep buying less and less attractive assets and therefore sacrificing alpha return. The combination of those two effects means that investors should look to buy at least 10 assets, but no more than 20.
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