Journal of Business & Economic Policy

Risk Tolerance, Demographics and Portfolio Performance
Zipporah Nyaboke Onsomu, Prof. Erasmus Kaijage, Prof. J. Aduda, Dr. C. Iraya

Abstract
The purpose of this study was to establish whether risk tolerance differs among investors based on their demographics (age, gender, education, and experience) and also to determine the relationship between risk tolerance and portfolio returns. A sample comprising of 279 investors who trade at the Nairobi Securities Exchange, Kenya was considered. Data was analyzed using ANOVA and regression analysis. The findings depicted that female investors, experienced investors, those with no academic qualifications and also older investors were more risk tolerant. As such, they held risky equity portfolios. Regression results indicated that risk is positively related with portfolio returns without the effect of demographics. However, when demographics moderate the relationship between risk and portfolio returns, the relationship becomes insignificant. The study concludes that age, gender, experience and education do not moderate in the relationship between risk and portfolio performance.

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