A hybrid approach for constructing suitable and optimal portfolios

► We consider suitability along with optimality in portfolio selection. ► We study personal preferences of investors and impersonal characteristics of assets. ► A hybrid approach is developed using multiple methodologies. ► Fuzzy portfolio selection model is proposed using four key asset allocation...

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Vydáno v:Expert Systems with Applications Ročník 38; číslo 5; s. 5620 - 5632
Hlavní autoři: Gupta, Pankaj, Inuiguchi, Masahiro, Mehlawat, Mukesh K.
Médium: Journal Article
Jazyk:angličtina
japonština
Vydáno: Elsevier Ltd 01.05.2011
Elsevier BV
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ISSN:0957-4174
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Shrnutí:► We consider suitability along with optimality in portfolio selection. ► We study personal preferences of investors and impersonal characteristics of assets. ► A hybrid approach is developed using multiple methodologies. ► Fuzzy portfolio selection model is proposed using four key asset allocation criteria. The purpose of the paper is to propose a hybrid approach for asset allocation with simultaneous consideration of suitability and optimality. In this approach, recourse is taken to multiple methodologies to simultaneously capture the impersonal characteristics of the financial assets as well as the personal preferences of the investors. Accordingly, the paper draws on Investors’ survey to capture their preferences, cluster analysis to categorize the financial assets, the analytical hierarchy process for obtaining local weights (performance scores) of the financial assets corresponding to the four key asset allocation criteria and fuzzy multi-objective linear programming model for portfolio selection.
ISSN:0957-4174
DOI:10.1016/j.eswa.2010.10.073