THE OPTIMAL PORTFOLIO OF STOCKS FOR GENERATION Z RETAIL INVESTORS USING THE SINGLE INDEX MODEL AND THE CONSTANT CORRELATION MODEL IN THE LQ45 INDEX

• Main Author: Maulidia Sultana G.W, Erlanda
• Format: Theses
• Language: Indonesia
• Subjects: Manajemen umum
• Online Access: https://digilib.itb.ac.id/gdl/view/79820
• Institution: Institut Teknologi Bandung

The Indonesian capital market witnessed a significant 93% surge in investor participation in 2021, driven by Generation Z retail investors amidst optimism fueled by vaccine developments. However, a survey targeting Generation Z retail investors from September 20th to October 11th, 2023, revealed that 44 out of 99 participants felt influenced by the “fear of missing out” (FOMO) in their investment decisions, exposing a gap in financial education. With Generation Z's higher risk tolerance, this study constructs portfolios using the single index and constant correlation models during stable market conditions (2018–2019) and the global crisis (2020–2021). Results highlight the constant correlation model's robustness in stable conditions and both models' ability to generate portfolios surpassing the risk-free rate during crises. While offering higher returns, this aligns with higher risk, emphasizing the need for generations with high risk tolerance for stock investors (Generation Z and millenials) to be aware of portfolio construction implications. Recognizing model limitations enhances decision-making in dynamic markets, and classical approaches remain relevant, underscoring the necessity for tailored financial education. This research serves as a guide for retail investors in optimizing risky portfolios effectively.