2010

Authors

  • Anup K. Basu Anup K. Basu
  • Alistair Byrne Alistair Byrne
  • Michael Drew Michael Drew

Lifecycle funds offered to retirement plan participants gradually reduce exposure to stocks as the funds approach the target date of the participants' retirement.The authors show that such deterministic switching rules produce inferior wealth outcomes for the investor compared to strategies that dymically alter the allocation between growth and conservative assets based on cumulative portfolio performance relative to a set target.The dymic allocation strategies proposed in this article exhibit almost stochastic domince over strategies that unidirectiolly switch assets without consideration of portfolio performance.