Asset Allocation vs. Security Selection: Their Relative Importance

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Investment Performance Measurement Feature Articles
May 2011 | Vol. 2011 | No. 1 | 9 pages
Source: CFA Institute
Renato Staub Brian Singer, CFA

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Abstract

Various researchers have investigated the importance of asset allocation versus security selection. Although we think this question is conceptually weak—because asset allocation and security selection have different missions—we address it to ensure appropriate quantitative treatment. We focus on feasibility rather than on what managers actually do. Hence, our approach is free of benchmark thinking and makes no assumptions regarding portfolio positions or potential constraints.

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Topics
Portfolio Management
    :
  • Performance Measurement, Attribution, and Appraisal
|
Performance Measurement and Evaluation
    :
  • Performance Attribution
|
Private Wealth Management
    :
  • Investment Strategy and Asset Allocation
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