Judgment Day
| 01 September 2007
Link to Article- Author: Callahan and Howard
- Publication: Investment Advisor
- Publication Date: September 2007
- Intro: In the Journal of Investment Consulting (Winter 2005-06) and in a series of articles in Investment Advisor (September 2005, February 2006, and March 2006), we made the case that constraining investment managers to “boxes,” defined by market capitalization and value-growth characteristics, costs about 300 basis points per year in underperformance. We referenced other studies that found similar results. We also showed that characteristic boxes are not asset classes and that diversifying funds among those boxes provides minimal, if any, risk reduction beyond what can be obtained by randomly selecting mutual funds.