Modified Dollar Cost Averaging Investment Strategy: Evidence From Major Developed International Stock Markets

Abstract

The Dollar Cost Averaging (DCA) method is widely used by individual investors as well as financial professionals and has been discussed extensively in the current literature. This study examines a modified DCA (MDCA) approach using a set of international stock market data. The research will test the hypothesis that the simple modification could enhance investor returns over those from the traditional DCA strategy. This is a subject of great interest to both academic researchers as well as to investors. Empirical results indicate that the MDCA strategy outperforms the DCA method across all of the international stock markets investigated.