Deutsche AWM points to asset allocation White Paper
It may be more important to hold broader asset classes rather than trying to identify individual securities within singular asset classes, according to a joint Global Financial Institute and Cambridge University paper cited by Deutsche Asset and Wealth Management.
In a White Paper titled Asset Allocation vs. Stock Selection, Sir Evelyn de Rothschild professor of finance Raghavendra Rau of Cambridge University concludes that asset allocation is the more important determinant of returns. This is because asset allocation strategies “yield a superior dispertion in returns than stock selection activities.”
The conclusion is based on studying correlations between 1991-2011 – a period that saw stock markets hit some of their all time highs as well as significant lows – such as after the so-called dot.com bubble burst.
The study also went beyond traditional asset classes, to include those such as real estate and commodities.
To read the White Paper click here: GFI Asset Allocation vs Stock Selection