An Asset Allocation Debate

Abstract

It has been typically said - at least for some fourteen years - that 94% of a portfolio's total return is attributable to its average allocation to stocks, bonds, and cash. These three practitioners address several questions in the ongoing debate about the asset allocation decision. The questions include: whether the study that is largely responsible for the claim looks at the wrong thing; whether it ignores costs and gives the wrong advice; whether investment practitioners misuse the results of the study in support of their own preferences.