Putting all their eggs in one basket? Portfolio diversification 1870 to 1902

Rutterford, Janette and Sotiropoulos, Dimitris (2016). Putting all their eggs in one basket? Portfolio diversification 1870 to 1902. Accounting History Review, 26(3) pp. 285–305.

DOI: https://doi.org/10.1080/21552851.2016.1219464


There are a number of reasons why investor portfolio characteristics are of interest. First, there is limited evidence of what individual investors actually held in their portfolios in the past, including, for example, whether there were significant differences between male and female investors. Second, investors’ portfolio holdings are relevant to the debate on the ‘democratisation’ of investment and, third, the inform the debate on whether investors in the past made efforts to reduce portfolio risk through diversification, before the full ‘scientific’ approach of the early twentieth century and the Markowitz optimisation approach of the mid-twentieth century. This paper explores the portfolio choices made by a sample of 508 investors – 263 men and 245 women - between 1870 and 1902. There is evidence of diversification, with the average holding of the sample being 4.6 securities. There is also evidence of increasing levels of diversification over time, of international diversification, and greater diversification by wealthy men and women. Investors in the past clearly made efforts to reduce portfolio risk before Markowitz optimisation.

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