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 Home > Asset Allocation Funds > Handcrafted Investment Strategies >  Asset Allocation
Asset Allocation

A Critical Component of Investment Success
Proper asset allocation gives you the potential to lower risk and increase returns by spreading your investments across a variety of asset classes and investment styles that will behave differently during market cycles. Just how important is it? According to one prominent study, asset allocation was the largest determinant of a portfolio's success—even more important than the individual securities selected.

Asset Allocation Determines 91.5% of the Variation of a Portfolio's Returns


Source: Based on the study by Gary P. Brinson, Randolph L. Hood and Gilbert L. Beebower, "Determinants of Portfolio Performance II," Financial Analysts Journal, May/June 1991. The study analyzed data from 82 large corporate pension plans with assets of at least $100 million over a 10-year period beginning in 1977 and concluded that asset allocation policy explained on average 91.5% of variation in total plan return.

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