PT - JOURNAL ARTICLE AU - Michael B Grelck AU - Stefan Prigge AU - Lars Tegtmeier AU - Mihail Topalov TI - Diversification Properties of Investments in Shipping AID - 10.3905/JAI.2009.12.1.055 DP - 2009 Jun 30 TA - The Journal of Alternative Investments PG - 55--74 VI - 12 IP - 1 4099 - https://pm-research.com/content/12/1/55.short 4100 - https://pm-research.com/content/12/1/55.full AB - In contrast to the more established alternative asset classes like real estate or hedge funds, there is not much research available for investments in shipping. This article contributes to closing this gap in the literature and investigates the diversification properties of investments in shipping. During the sample period, an investment in shipping stocks earned an attractive risk-return combination. In general, the addition of an investment in shipping stocks to a base portfolio of stocks and bonds enhanced diversification. The results also reveal other insights. First, the composition of the shipping stocks portfolio mattered much. Compared with the MSCI World Marine Index, which is a capitalization-weighted aggregate of 10 stocks, the diversification benefit of the broader and equally-weighted shipping stocks portfolio of our Research Index, with 41 stocks, was much more pronounced and somewhat statistically significant. Second, diversification properties were not stable through the course of time with larger diversification benefits during the bear market from March 2000 to March 2003 compared to the bull market from April 2003 to October 2007. The positive overall view of the diversification properties of shipping stocks is based on a single full stock market cycle.TOPICS: Real assets/alternative investments/private equity, global, security analysis and valuation, portfolio construction