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Retail Investing in Passive Exchange Traded Funds

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El Hichou El Maya, Younes [UCL] D'Hondt, Catherine [UCL] Petitjean, Mikael [UCL]

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.

Document type Communication à un colloque (Conference Paper) – Présentation orale avec comité de sélection
Access type Accès libre
Publication date 2020
Language Anglais
Conference "6th International Symposium in Computational Economics and Finance ISCEF 2020", Online (Paris) (du 02/04/2020 au 04/04/2021)
Affiliation UCL - SSH/LIDAM/LFIN - Louvain Finance
Keywords Behavioral biases ; ETFs ; Financial literacy ; Passive investing ; Retail investors.
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Bibliographic reference El Hichou El Maya, Younes ; D'Hondt, Catherine ; Petitjean, Mikael. Retail Investing in Passive Exchange Traded Funds.6th International Symposium in Computational Economics and Finance ISCEF 2020 (Online (Paris), du 02/04/2020 au 04/04/2021).
Permanent URL http://hdl.handle.net/2078.1/237026