Allocation of Assets on the Ghana Stock Exchange (GSE)

Lord Mensah, R. K. Avuglah, Vincent Dedu

Abstract


In this paper, we use stock price data between the years 2007 and 2010 to investigate the allocation of assets on the GSE. The Classical Markowitz optimization method shows that, the most profitable portfolio is obtained by investing 90% of wealth in non-financial assets and 10% in financial assets. Risk aversive investor who goes for the minimum risk portfolio has to invest 80% in non-financial assets and 20% in financial assets. We also find that, if the investor decides to split his wealth among the financial and non-financial asset equally, his profit will not be as much as the minimum and the optimum risk portfolio. In effect, there is a reward for risk on the GSE but the Markowitz optimization strategy never exceeds the buy and hold strategy of the market index.

Full Text: PDF DOI: 10.5430/ijfr.v4n2p108

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This work is licensed under a Creative Commons Attribution 3.0 License.

International Journal of Financial Research
ISSN 1923-4023(Print) ISSN 1923-4031(Online)

 

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