This article presents a highly intuitive approach for visualizing return
distributions for a basic form of cash/equity allocations. This
“percentile fan” framework can help clarify some of the key
risk–return trade-offs in intuitive ways for a wide set of asset owners.
In particular, percentile fans can help investors express their portfolio
objectives in terms of return targets or shortfall limits over one or more
horizons. For some investors, these intuitive goals, especially when depicted in
a visual context, can feel like a more natural approach than the standard
mean–variance utility framework.