Private and Collective Direct Investments in Popular Shares of Russian Companies
The arrival of tens of millions of private investors to the stock exchange and their involvement in direct stock trading increases the relevance of empirical studies of the effectiveness of their strategies. The article analyzes for the first time the return and risks of the so-called people's...
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| Language: | English |
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Financial Research Institute
2025-02-01
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| Series: | Финансовый журнал |
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| Online Access: | https://www.finjournal-nifi.ru/images/FILES/Journal/Archive/2025/1/statii/01_1_2025_v17.pdf |
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| author | Alexander E. Abramov Maria I. Chernova Andrey G. Kosyrev |
| author_facet | Alexander E. Abramov Maria I. Chernova Andrey G. Kosyrev |
| author_sort | Alexander E. Abramov |
| collection | DOAJ |
| description | The arrival of tens of millions of private investors to the stock exchange and their involvement in direct stock trading increases the relevance of empirical studies of the effectiveness of their strategies. The article analyzes for the first time the return and risks of the so-called people's portfolio published by the Moscow Exchange. The aim is to study the profitability and risks associated with investing in the most popular stocks on the Russian market, which are highlighted by the publication of the people's portfolio. This study confirms the phenomenon of “wisdom of the crowd” in the domestic stock market, as it shows that the yield of the people's portfolio is comparable with or even higher than that of the widely used Moscow Exchange indices. We reveal similar patterns in the investment preferences of private investors among Russian and American brokers. At the same time, the risk of herding behavior of private investors keeps increasing along with the concentration of their trades in a narrow range of high-profile stocks. In contrast to traditional mechanisms of increasing the risk of investors’ herding behavior through social networks and online brokerage applications, we show that popularization of people's portfolio by the stock exchange can have a similar effect. The returns of the people's portfolioare significantly lower than more diversified portfolios of Russian companies, which increases private investors’ risks from active trading strategies. The growing popularity of exchange-traded mutual funds does not yet allow private investors to take advantage of broader diversification, as the assets of these funds are dominated by the same stocks as in the people's portfolio. Investing in more diversified passive factor strategies could significantly improve the performance of both private investors and exchange-traded funds compared to investing in people's portfolio stocks. It would also help to improve the financing of new and growing companies on the Moscow Exchange. |
| format | Article |
| id | doaj-art-9491ecaebdf84e8e8110bf968a587e1a |
| institution | DOAJ |
| issn | 2075-1990 2658-5332 |
| language | English |
| publishDate | 2025-02-01 |
| publisher | Financial Research Institute |
| record_format | Article |
| series | Финансовый журнал |
| spelling | doaj-art-9491ecaebdf84e8e8110bf968a587e1a2025-08-20T03:05:09ZengFinancial Research InstituteФинансовый журнал2075-19902658-53322025-02-0117182610.31107/2075-1990-2025-1-8-26Private and Collective Direct Investments in Popular Shares of Russian CompaniesAlexander E. Abramov0https://orcid.org/0000-0003-4285-9115Maria I. Chernova1https://orcid.org/0000-0003-0144-1820Andrey G. Kosyrev2https://orcid.org/0000-0002-1951-4904RANEPA, Moscow, Russian FederationRANEPA, Moscow, Russian FederationRANEPA, Moscow, Russian FederationThe arrival of tens of millions of private investors to the stock exchange and their involvement in direct stock trading increases the relevance of empirical studies of the effectiveness of their strategies. The article analyzes for the first time the return and risks of the so-called people's portfolio published by the Moscow Exchange. The aim is to study the profitability and risks associated with investing in the most popular stocks on the Russian market, which are highlighted by the publication of the people's portfolio. This study confirms the phenomenon of “wisdom of the crowd” in the domestic stock market, as it shows that the yield of the people's portfolio is comparable with or even higher than that of the widely used Moscow Exchange indices. We reveal similar patterns in the investment preferences of private investors among Russian and American brokers. At the same time, the risk of herding behavior of private investors keeps increasing along with the concentration of their trades in a narrow range of high-profile stocks. In contrast to traditional mechanisms of increasing the risk of investors’ herding behavior through social networks and online brokerage applications, we show that popularization of people's portfolio by the stock exchange can have a similar effect. The returns of the people's portfolioare significantly lower than more diversified portfolios of Russian companies, which increases private investors’ risks from active trading strategies. The growing popularity of exchange-traded mutual funds does not yet allow private investors to take advantage of broader diversification, as the assets of these funds are dominated by the same stocks as in the people's portfolio. Investing in more diversified passive factor strategies could significantly improve the performance of both private investors and exchange-traded funds compared to investing in people's portfolio stocks. It would also help to improve the financing of new and growing companies on the Moscow Exchange.https://www.finjournal-nifi.ru/images/FILES/Journal/Archive/2025/1/statii/01_1_2025_v17.pdfpeople’s portfoliostock marketprivate investorfactor strategiesmutual investment fundsdiversification |
| spellingShingle | Alexander E. Abramov Maria I. Chernova Andrey G. Kosyrev Private and Collective Direct Investments in Popular Shares of Russian Companies Финансовый журнал people’s portfolio stock market private investor factor strategies mutual investment funds diversification |
| title | Private and Collective Direct Investments in Popular Shares of Russian Companies |
| title_full | Private and Collective Direct Investments in Popular Shares of Russian Companies |
| title_fullStr | Private and Collective Direct Investments in Popular Shares of Russian Companies |
| title_full_unstemmed | Private and Collective Direct Investments in Popular Shares of Russian Companies |
| title_short | Private and Collective Direct Investments in Popular Shares of Russian Companies |
| title_sort | private and collective direct investments in popular shares of russian companies |
| topic | people’s portfolio stock market private investor factor strategies mutual investment funds diversification |
| url | https://www.finjournal-nifi.ru/images/FILES/Journal/Archive/2025/1/statii/01_1_2025_v17.pdf |
| work_keys_str_mv | AT alexandereabramov privateandcollectivedirectinvestmentsinpopularsharesofrussiancompanies AT mariaichernova privateandcollectivedirectinvestmentsinpopularsharesofrussiancompanies AT andreygkosyrev privateandcollectivedirectinvestmentsinpopularsharesofrussiancompanies |