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Author(s): |
Yang Hu, School of Business, Tianjin University of Commerce, Tianjin, China, 300134
Rongrong Zhao, School of Business, Tianjin University of Commerce, Tianjin, China, 300134
Shuhai Liu, School of Business, Tianjin University of Commerce, Tianjin, China, 300134 |
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Abstract: |
As a simple and popular strategy, Dollar cost averaging (DCA) is used by many individual investors as a time-honored way to increase long-term investment returns. Dollar Cost Averaging is widely recommended by professional investment advisors, as a strategy for purchasing securities. In recent years, automatic investment plan of mutual fund is becoming more and more popular in China, which is a typical form of DCA. However, there is a puzzle that most academic studies suggest that DCA is suboptimal. In addition, it the puzzle has been virtually ignored by academic theorists in China. This paper attempts to reveal the puzzle.
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