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- Title
The overlooked momentum traders in 401(k) plans.
- Authors
Ning Tang
- Abstract
Using a unique dataset on over one million 401(k) traders, we investigate momentum trading in 401 (k) plans. We identify momentum traders in each quarter and evaluate how these traders perform. Results indicate the existence of momentum traders. However, there is no evidence that they successfully improve their portfolio performance. Instead, momentum sellers sell the outperformed funds. Overall, momentum traders could lose up to 2.14% per year. In seeking to explain such losses, we observe that 401 (k) momentum traders follow a naive momentum strategy. They do not have the ability to select funds with momentum investing styles but, instead, simply chase past returns.
- Subjects
MOMENTUM investing; 401(K) plans; STOCKS (Finance); BOND market; INVESTMENTS
- Publication
Financial Services Review, 2016, Vol 25, Issue 1, p51
- ISSN
1057-0810
- Publication type
Article