In this paper, the authors distinguish between actual asset allocation and long-term, target asset allocation, otherwise know as “policy.” The investment policy, they say, has a greater effect on the portfolio’s return than either the sponsor or manager, or the transaction costs or timing and selection.
Investment Policy Explains All
Ronald J. Surz, Roxbury Capital Management;
Dale Stevens, Wurts & Associates;
and Mark Wimer, Ibbotson Associates