The future of true asset allocation may lie in understanding its past.
The results are in. Asset allocation doesn’t work in the long run. Rebalancing doesn’t produce better returns in the long run. In short, asset allocation as popularly practiced is myth.
Much of asset allocation marketing collateral is founded on a simple misinterpretation, yet this myth persists. Why?
Are our expectations of Asset Allocation too high?
Perhaps we’ve learned choice isn’t all that it’s cracked up to be.
Over the decades, the role and standard of different types of service providers has shifted when it comes to plan design. But one thing remains constant.
If 401k plan sponsors have failed to update both their plan menu options and their education program to this new paradigm, they may have unknowingly placed their employees in peril.
Volatility simply can’t be used to measure risk because it contains components both of risk and reward. Here’s a better way to measure true investor peril.
Despite evidence of its uselessness, it’s been a long goodbye for volatility. Will this bomb unsuspecting plan sponsors?
It’s clear behavioral finance and economics studies will continue to define the leading edge of 401k design and implementation.