In 1986, Brinson, Hood, and Beebower determined that asset allocation is responsible for over 93% of the variation of portfolio performance. Though this might be true in a theoretical world without expenses and emotions, we’ve all seen the data with the gap between investor return and fund return. That’s because clients fiddle with asset allocation, chasing performance. Unfortunately, there is also significant data to show that advisors, as a whole, also have this problem.
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