TY - JOUR T1 - Passive versus Optimized Investing in Retirement Plan Portfolios JF - The Journal of Wealth Management SP - 48 LP - 59 DO - 10.3905/jwm.2009.12.2.048 VL - 12 IS - 2 AU - Jeff Grover AU - Angeline M Lavin Y1 - 2009/07/31 UR - https://pm-research.com/content/12/2/48.abstract N2 - This article uses portfolios of Vanguard index funds to study the optimal portfolio allocation strategy for long-term investors who are saving for retirement. The optimization, conducted using both a single-index-hybrid model (SIHM) and the Markowitz–Sharpe optimization method, suggests that in the long run, an optimized allocation strategy will yield cumulative returns equivalent to those of a passive allocation strategy with significantly less risk. In addition, the optimized allocation strategy achieves the favorable risk and reward profile using fewer funds than the passive strategy.TOPICS: Retirement, passive strategies, portfolio construction, performance measurement ER -