10 Reasons Why Small Investors Stay Away From Rights Issue

Reasons Why Small Investors Stay Away From Rights Issue Woman investor expressing her feelings for not subscribing rights issue.

(10) Prevent Disturbances In A Well-Balanced Stock Portfolio

It is one of the most popular reasons why small investors don’t subscribe rights issue. Every investor prefers to invest in a given stock as per his/her own risk taking capabilities. It is something necessary to build an ideal stock portfolio as per individual needs.

For example, if a person is already invested in a risky stock up to his/her maximum possible limit then perhaps he/she will refrain from investing more funds in a risky stock.

Therefore, if a company belonging to risky group of an investor portfolio brings a rights issue then such investor will prefer not to subscribe a given issue.

It is due to the fact that subscribing in a given issue will increase his/her investment in risky stocks. This will ultimately damage the balance of a well build stock portfolio to some extent.

Thus, investors prefer to ignore rights issue even when his/her stake will be diluted in the company after rights issue.

[Read Also: 10 Factors Determining Market Price Action Post Rights Issue]

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  • Reasons Why Small Investors Stay Away From Rights Issue: Shutterstock

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