The effect of investment style on portfolio performance:Evidence from the Nairobi Securities Exchange

Abstract

The investors must trade to make a return and the choice of where to invest and how many times to trade lies with the investor. This study sought to determine whether the investment styles adopted by the investors on the Nairobi Securities Exchange have an effect on their portfolio performance. The relationship was tested using multiple regression analysis on a sample of 385 individual retail investors. The overall model was statistically significant indicating that investment style influences portfolio performance. Passive investment style and Growth oriented investment style have a significant relationship with portfolio performance with growth having a negative effect while passive style has a positive effect. The implication here is that investors who actively trade should cautiously evaluate the implication on their portfolio to avoid the negative effects.