Faculty Publications - School of Business

Document Type

Article

Publication Date

1999

Abstract

Life-cycle funds, among the newest asset allocation fund offerings, are managed according to investors' time horizons and risk tolerances. Partly in response to the appearance of these funds, we examined the relationships among the risk in individual investors' portfolios, their financial-planning time horizons, and their risk tolerances. Generally, we found that portfolio risk increases as time horizon and willingness to take risk increase. This relationship held when we used willingness to take risk increase. This relationship held when we used multivariate analysis. Additional factors related to portfolio risk were found to be the investors' expectations of a future economic downtown, age, education, and marital status.

Comments

Originally published in Financial Analysts Journal, 55(5) September/October 1999.

See it here:
http://www.cfapubs.org/toc/faj/1999/55/5

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