One size doesn’t fit all: Investor heterogeneity in Denmark

Abstrakt

In this thesis I will focus on differences among the private Danish investors based on gender, age and geography when looking at the private investors behavior in relation to risk, individual papers vs. mutual funds and what they are affected by when buying and selling stocks. I will investigate what might cause differences among the private Danish investors when looking at how they traded in the period from February 2009 to January 2012 from a behavioral finance perspective. The method behind this thesis is quantitative and has its focus on trading data from VP Securities A/S and from a survey made by Nykredit on how the private investors think of investments and savings. Based on my empirical study, I will argue that there are differences among the private Danish investors and that handling them as one homogeneous mass could lead to misunderstands and unsatisfied customers. I will investigate what might cause these differences among the investors looking at both traditional neoclassical finance theory and behavioral finance theory, together with what other researchers have found when studying within the field of behavioral finance. I will argue that private investors are affected by behavioral themes such as overconfidence and representativeness when investing their money. I will also argue that male investors are more overconfident than female investors and that investors between 30-40 years of age are more overconfident than the other age groups. When looking at geography, I will argue that investors located on Sjælland in general are more overconfident than the rest of Denmark and that investors on Fyn and Bornholm are those who take on less risk and are less overconfident. Last I will argue that there are differences between those investors who buy individual stocks and those who buys stocks in mutual funds, and that male investors are more affected by changes in the OMX C20 index when buying and selling individual stocks.