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The True Impact of Asset Allocation on Returns

February 28, 2000

Roger G. Ibbotson

In summary, the impact of asset allocation on returns depends on an individual’s investing style. For the long-term, passive investor, the asset allocation decision is by far the most important. For the short-term investor who trades more frequently, invests in individual securities, and practices market timing, asset allocation has less of an impact on returns. The impact of asset allocation on performance is directly correlated with investment style.

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