Investment companies as an investment – Could a person without experience from investments bee helped by the active ownership of investment companies?

University essay from KTH/Fastigheter och byggande; KTH/Fastigheter och byggande

Abstract:

In this essay we have been studying the development of investment companies that is traded at

Mid Cap and Large Cap at the Stockholm stock market. We took out five investment companies at random from the mentioned markets above. We used these companies as benchmarking for the study. To measure the development we looked at the change in the stock price and the total yield over the given time period, we then compared these to three random portfolios of 8 stocks each and the index called Six-Return index. All the companies in the random portfolios have another type of owner structure and lack Investment Company as a big owner. Those companies have a more divided ownership. In the essay we also look at the yield with consideration to the

risk that is taken in the given investment in forms of Sharpe ratio and standard deviation for each portfolio. To get some extra insight we have interviewed Investor AB and Investment AB

Latour. Both companies are leading investment companies in Sweden. The time period for the essay is 10 years and is stretching from 2004-01-01 until 2014-01-01.

The results from the paper are that investment companies in general had a higher yield then the index and portfolios that was used as comparison. The results for the investment companies are better in terms of change in stock price and in yield but also with the consideration of the risk. The explanation of the results lies in several variables where the active ownership of the investment companies is the major part of the explanation and net asset discount together with the high dividend is another part. With these result investment companies is supposedly a very good investment for t

hose that can’t beat the market, which would mean a great deal of all

investors.

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