Asset Allocation and Investment Horizon

Authors

  • Keith V. Smith Professor of Management, Krannert Graduate School of Management, Purdue University, West Lafayette, IN 47907

DOI:

https://doi.org/10.1016/S1057-0810(97)90014-7

Abstract

Quarterly recommendations by national brokeragefirms since the third quarter of 1989 provide an opportunity to compare different approaches to asset allocation. To follow a brokerage firm’s recommendation every quarter is to practice tactical asset alloca- tion. Both the length of the investor’s decision horizon and brokerage commissions that are incurred when portfolio changes are made impact investment performance, and both contribute to the risk experienced by investors. Buy-and-hold and strategic asset allocation would have served investors better than tactical asset allocation during the first half of the 1990s.

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Published

1997-09-30

How to Cite

Smith, K. V. (1997). Asset Allocation and Investment Horizon. Financial Services Review, 6(3), 201–219. https://doi.org/10.1016/S1057-0810(97)90014-7

Issue

Vol. 6 No. 3 (1997): Financial Services Review

Section

New Original Submission

License

Copyright (c) 1997 JAI Press Inc.

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