Professor on PBU's equity portfolio trim: 50-100 holdings are enough

It's not necessarily a problem for diversification that Denmark's Pension Fund of Early Childhood Teachers – PBU – is cutting down its equity portfolio from 3,500 to 300 firms, according to Jesper Rangvid.

Finance professor at Copenhagen Business School Jesper Rangvid. | Photo: Stine Bidstrup/EXPLORER

When diversifying your investments, it's not the size of your portfolio that matters, but it's the extent to which your portfolio reflects the stock market that's important.

Copenhagen Business School's Professor of Finance Jesper Rangvid's understanding of diversification may be boiled down to the above. He holds that pension funds may benefit from trimming their equity portfolios from encompassing thousands of companies to just a few hundred firms.

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