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Significance Of The Portfolio Scope For Improving The Results Of The Active Portfolio Management– Following The Example Of The Emerging Stock Markets In Southeast Asia

Author

Listed:
  • Plamen Patev

    (I Shou University, Kaohsiung)

  • Kaloyan Petkov

    (Стопанска академия "Д.А.Ценов")

Abstract

Active portfolio management is widely used in investment practice with the goal of securing better performance results from the investment process. Active portfolio management has gathered significant attention from both academics and practioners. Our goal is to investigate the class between two competing ideas. On one hand increasing the Breadth of the portfolio we should have bigger diversification effect. On the other hand increasing the number of assets (Breadth) should lead to smaller forecasting ability and therefore lower IC . Presented results show that our first hypothesis is confirmed – increasing the number of assets in the portfolio magnifies the effect of the active management. Additionally we show that when managers increase their Breadth, they increase not only IR, but also manage to decrease IC which shows better stability of our forecasting skill through time.

Suggested Citation

  • Plamen Patev & Kaloyan Petkov, 2017. "Significance Of The Portfolio Scope For Improving The Results Of The Active Portfolio Management– Following The Example Of The Emerging Stock Markets In Southeast Asia," Business Management, D. A. Tsenov Academy of Economics, Svishtov, Bulgaria, issue 4 Year 20, pages 15-32.
    • Handle: RePEc:dat:bmngmt:y:2017:i:4:p:15-32
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    File URL: http://hdl.handle.net/10610/3401
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    More about this item

    Keywords

    breadth; strategy risk; alpha; active portfolio management;
    All these keywords.

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets
    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models

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