Effect of Investor’s Investment Evenues on Individual Portfolio Choice at The Nairobi Securities Exchange, Kenya

Abstract

Investor’s specific needs plays a major role of determining a portfolio choice of an investment portfolio composed of a single or multiple assets that an investor chooses within a certain period of time. The objective of this study was to assess the effect of investor’s Investment Avenues on individual portfolio choice at the Nairobi securities exchange and to investigate the moderating effect of investor’s age on the correlation investor’s Investment Avenues and individual portfolio choice at the Nairobi securities exchange. A descriptive research design was used for collecting data for the variables under study for up to a period of twenty years from January, 2013 to December, 2017. The population of study was made up of individual investors estimated at 2.4 million as at 31st December 2017 based on Central Depository and Settlement Corporation Limited (CDSC). A target population of 997,605 active retail investors who also form the accessible population at Nairobi securities exchange (NSE) were used to draw a sample size of 385 active individual retail investors. Both stratified and convenience sampling was used to draw the needed number of respondents. A structured questionnaire was used to collect the data whereby drop and pick approach was used. Pilot testing of the instruments was performed to assess its reliability. Further, multiple regression techniques were used to analyze the data. The study findings revealed that investor’s Investment Avenues have a positive and significant effect on individual portfolio choice at NSE, Kenya. As such a unit increase in a predictor variable leads to an increase in individual portfolio choice through investment in stocks. Further, the results of the study indicated that age moderate the relationship between investor’s Investment Avenues and individual portfolio choice. The study would be beneficial to investment banks and brokerage firms in policy formulation to assist individual investors in their portfolio choices and also to the academicians to advance the conceptual arguments of the moderating effect of age on the relationship between investor’s Investment Avenues and individual portfolio choice at NSE, Kenya.