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under-diversification

Information Acquisition and Portfolio Under-Diversification: Individual investors hold a fraction of their equity portfolio in a highly diversified mutual fund and another fraction in a small number of highly correlated assets. Such behavior is optimal for investors who face constraints on how much they can learn. Optimal under-diversification arises because of increasing returns to scale...; Tags: Asset, Fraction, Acquisition, Investor, Under-diversification, Asset Management, Operational Planning, Business Operations; White papers 2004-09-22