Eight out of 10 investors believe they are practicing adequate asset allocation, according to a survey conducted by Ibbotson Associates and the Hartford Financial Services Group. However, the majority confuse one-time asset allocation with ongoing diversification.
The survey also showed that investors who were most familiar with asset allocation also had greater investible assets and felt that their returns had exceeded their expectations.
Following an asset allocation strategy is the more important factor for generating long-term returns, said Mary Jane Fortin, senior vice president for mutual funds and 529 programs.
"For the long-term investor, asset allocation is the primary determinant of returns," Fortin said "Developing the right asset allocation plan based on risk tolerance and investment horizon and then sticking to that plan with appropriate and timely rebalancing, increases the chances that an individual will meet his or her goals."
Hartford introduced an allocation program, Portfolio Planner, for its variable annuities last November. Now, the company has transferred the concept to its mutual funds, creating five funds-of-funds for the new Hartford Allocation Funds line.
The portfolios are rebalanced quarterly and constitute a simple way for advisers to help client stay on track with their investment goals, said Bruce Ferris, senior vice president of sales and marketing for investment products.