Return Measures and Dollar Cost Averaging

Chittenden, William T.; Moon, Kenneth P.; Toles, J. Holland
August 2010
Journal of Financial Planning;Aug2010, Vol. 23 Issue 8, p62
Academic Journal
The article discusses the financial study of dollar cost averaging (DCA) versus lump sum (LS) investments wherein debate is centered on how to accurately measure the investors' true returns. Both Rozeff and Rosenbloom demonstrates that LC is more superior than DCA as long as there is a positive and risk-free rate stock returns, otherwise, DCA will outperform it. It is believe that dollar-weighted return is much superior to the traditional simple averages typically employed but a higher equity was shown in the geometric average return. But, Ilia Dichev demonstrated the overstated of 5 percent done by the researcher in the geometric average return. Also included are figures which present the effective annual fund (EAR) during the period of 1990 to 2009.


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