||The traditional investment strategy of Dollar-Cost Averaging began to change in recent years. The article is about the advanced investment strategy of “Efficient Investing Method” and “Value Averaging Method”. In order to present the comparison of advanced investment strategy and traditional Dollar-Cost Averaging completely, the study include the analysis of the traditional Dollar-Cost Averaging, to make the research through different market types and trends. Hopefully the info about investment returns and risk analysis of 3 investment strategies will be useful for the investors.|
There are total 720 valid samples, including W0G1 Index、HW00 Index、S&P 500、stoxx Europe 600 Index、MSCI EM Index and MSCI EM ASIA Index and the market has experienced many ups and downs of the business cycle during Y2006 to Y2015. We examine the difference between “Efficient Investing Method”, “Value Averaging Method” and “Dollar-Cost Averaging” by using one-way ANOVA analysis whose lock-in-gain points are at 5%, 10%, 15% and 20% individually, then discuss the reason of the diversity.
We found that the performance, Sharpe ratio and Standard Deviation of “Efficient Investing Method” are better than the other 2 strategies no matter how market trend becomes. It is because “Efficient Investing Method” has the advantage of asset allocation which can raise the investment returns effectively and reduce the risk of market fluctuations. The second one is “Value Averaging Method” which is also better than “Dollar-Cost Averaging” in investment performance, Sharpe ratio and SD. However, “Value Averaging Method” takes the strategy of buy more in the bear market, which causes the investors tend to be impacted by the return on investment and then paid indemnities, also ignore the potential advantages of the investment cost declines rapidly.
With the investment tools and methods have become more diverse, different investment strategies have their advantages and disadvantages, nothing is the best or the worst. Instead, investors should choose the most suitable way for themselves based on individual circumstance.