The behavior of Taiwanese investors in asset allocation

Abstract

Purpose – This paper aims to identify traits of Taiwanese investors that deviate from the typical rationale governing financial decisions, through the analysis of their asset preferences and investment criteria. It also highlights the post‐modern portfolio theory to address the behavior of Taiwanese investors found in our result and in other studies.Design/methodology/approach – The time period between late 2007 and 2008 was our choice for this investigation, being a period of considerable volatility in the Taiwanese market during a major political campaign and a downturn of the economy. We took into account the factors of market environment, investment amount, expected return rate, risk tolerance and investment type to investigate the relationship between these factors and investors' preferences when selecting assets such as mutual funds, stocks, bonds and foreign currency. The analytical hierarchy process (AHP) method was then employed to analyze the survey data.Findings – Risk tolerance is the most imp...