Homepage
PR Newswire
05-02-2013, 11:15 AM
There is another perspective to the argument between diversified and focused approaches and that is buy and sell (not incessant trading but regular portfolio rebalancing) versus buy and hold (assuming no market timing and both are fully invested at all times).
I do not have hard data to back me up but my very limited experience is that more of the focused approach investors are also inclined to buy and hold as they are comfortable holding large outsized positions. Whereas diversified approach investors tends to buy and sell as they rebalance their portfolios.
The latter has a drag in the US but not in Singapore due to the presence of capital gains tax over there - this can account for as much as 20% difference in performance.
For the record I am a diversified approach buy and sell investor (but almost no market timing and almost always fully invested).
I do not have hard data to back me up but my very limited experience is that more of the focused approach investors are also inclined to buy and hold as they are comfortable holding large outsized positions. Whereas diversified approach investors tends to buy and sell as they rebalance their portfolios.
The latter has a drag in the US but not in Singapore due to the presence of capital gains tax over there - this can account for as much as 20% difference in performance.
For the record I am a diversified approach buy and sell investor (but almost no market timing and almost always fully invested).