Roger Ibbotson Receives Financial Writing Award
Roger Ibbotson, professor in the practice of finance, has been honored with the 2010 Best Perspectives Award of the Financial Analysts Journal for his paper "The Importance of Asset Allocation." The award recognizes excellence in financial writing.
In the paper, published in the March/April 2010 issue of the Financial Analysts Journal, Ibbotson examines the importance of long-term asset allocation relative to active management in determining fund performance. He finds that approximately three-quarters of the variation in a typical fund's returns comes from general market movement, with the remaining variation split about equally between asset allocation policy and active management.
"The time has come for folklore to be replaced with reality," writes Ibbotson. "Asset allocation is very important, but nowhere near 90 percent of the variation in returns is caused by the specific asset allocation mix. Instead, most time-series variation comes from general market movement."