RT Journal Article
SR Electronic
T1 Volatility Management and Wealth Creation: <em>A Long-Term Perspective</em>
JF The Journal of Wealth Management
FD Institutional Investor Journals
SP 27
OP 32
DO 10.3905/jwm.2011.14.3.027
VO 14
IS 3
A1 Murad J. Antia
YR 2011
UL https://pm-research.com/content/14/3/27.abstract
AB Investors may not understand the wealth-destroying implications of their investment decisions, because of the deleterious effect of volatility of returns on wealth creation. Managing the volatility of returns is integral to creating long-term wealth. The methodology presented quantifies the single-period risk-and-return tradeoff that investors need to be aware of to create long-term wealth. Practitioners can use it as a tool to educate clients about the wealth-creating benefits of diversification. Economic sector return data is used to demonstrate that underdiversified portfolios, as opposed to diversified portfolios, inhibit long-term wealth creation, because of the volatility drag associated with underdiversified portfolios.TOPICS: Wealth management, risk management, portfolio construction