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In its new white paper, Global Financial Institute (GFI) partners with Sir Evelyn de Rothschild Professor of Finance Raghavendra Rau of Cambridge University to address the question, “is it better for investors to select particular securities within an asset class or hold broad asset classes and shift the mix among asset classes?“ In the white paper, titled “Asset Allocation vs. Stock Selection“, Professor Rau explains the evidence from his independent simulation exercise, with which he presents his conclusion that asset allocation strategies are more important than stock selection strategies. More specifically, they yield a superior dispersion in returns than stock selection strategies, especially in times of economic crisis and high market volatility.
The significance...
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