| The allocation of your investment dollars has more impact on your
overall investment success than anything else. The asset allocation
decision is the single most important factor in determining both performance
(return) and risk (standard deviation) of an investment portfolio.
According to a key study of pension fund performance*, the overwhelming
determinant of the success or failure of an investment strategy
is how the assets were divided among the various asset classes (stocks,
bonds, cash equivalents). Which securities or mutual funds were
bought or sold, and when the investments were made, had considerably
less impact, as the chart below shows.
*Source: Brinson, B. Gary, Brian D. Singer and Gil L. Beebower;
Financial Analysts Journal; May-June 1991.
Previous
- Next
|
