StudentShare
Contact Us
Sign In / Sign Up for FREE
Search
Go to advanced search...
Free

Portfolio Asset Allocation on LEE Pension Fund - Research Paper Example

Cite this document
Summary
The paper "Portfolio Asset Allocation on LEE Pension Fund" gives a report on asset allocation in a Pension Fund. Asset allocation is critical to any investment performance plan. The paper has inspected how alternative mix-assets allocation on Pension Fund can be useful…
Download full paper File format: .doc, available for editing
GRAB THE BEST PAPER95.2% of users find it useful
Portfolio Asset Allocation on LEE Pension Fund
Read Text Preview

Extract of sample "Portfolio Asset Allocation on LEE Pension Fund"

Long-term corporate bonds had the lowest correlation (-0.011827), implying they would be a desired asset for risk reduction, among the portfolios, using increased diversification. Standard deviations (SD) and means were also calculated to give a relative comparison between the different asset classes regarding return and risk. Before the 1970s, real estate never existed as a recognizable and established investment “asset class.” As an alternative, the portfolios of organizational investors like pension funds entailed almost exclusively bonds, stocks, and cash.

However, this situation changed as inflation and modern portfolio theory caused the establishment of real estate as one institutional investment asset class. The current undesirable performance in the equity market implies real estate is progressively registering mixed-asset portfolios. Nevertheless, determining whether the desired return in real estate is one long-term phenomenon or a temporary thing is a concern that remains hugely unanswered. In simple terms, little or no even evidence exists to prove whether real estate ought to play an unswerving function in the mixed-asset portfolio across long-term and short-term investment horizons.

We intend to explore and give more light regard to the uncertainty surrounding the mixed-asset portfolio. This was our primary concern as far as this paper is concerned. To protect the portfolios from any short-term or long-term fluctuation in the market, the pension systems spread assets across a wide range of asset classes. This allowed each portfolio to uphold stability through turbulent market cycles. Every system's asset was invested in bonds, stocks, real estate, and global asset allocation strategies, with a small asset allocation to associate partnerships.

The assets incorporated in the analysis were given as follows: These investment categories exhibited imperfect correlations since when one category was wavering, another was doing exceedingly well or both were moving in the same direction: either doing well together or performing poorly (see table 1).

This was evidenced by the positive and negative correlation coefficients, which described the direction of movement between every asset class. Long-term corporate bonds had the lowest correlation (-0.011827), implying they would be a good asset for risk reduction, among the portfolios, by means of increased diversification. Moreover, the findings also proved that small capital stocks are highly and positively correlated with large capital stocks (correlation coefficient = 0.8348881). Spreading the portfolios across a wide range of assets minimizes the impact of temporary volatility that happened within every asset class.
Standard deviations (SD) and means were calculated so as to offer a relative comparison between the different asset classes with regard to return and risk. SCS had the biggest deviation from the mean (SD = 11.55 and Mean = 3.55). Treasury Bills, on the contrary, exhibited the smallest deviation from the mean (SD = 0.54 and Mean = 0.71).

Conclusion
This report has scrutinized how alternative mix-assets allocation on Pension Fund can be useful. It has specifically addressed the concern of whether the anticipated shift towards substitute asset classes can possibly occur as an alternative to funds allocation.


Read More
Cite this document
  • APA
  • MLA
  • CHICAGO
(“Portfolio Asset Allocation on LEE Pension Fund Research Paper - 1”, n.d.)
Portfolio Asset Allocation on LEE Pension Fund Research Paper - 1. Retrieved from https://studentshare.org/finance-accounting/1686027-portfolio-asset-allocation-on-lee-pension-fund
(Portfolio Asset Allocation on LEE Pension Fund Research Paper - 1)
Portfolio Asset Allocation on LEE Pension Fund Research Paper - 1. https://studentshare.org/finance-accounting/1686027-portfolio-asset-allocation-on-lee-pension-fund.
“Portfolio Asset Allocation on LEE Pension Fund Research Paper - 1”, n.d. https://studentshare.org/finance-accounting/1686027-portfolio-asset-allocation-on-lee-pension-fund.
  • Cited: 0 times

CHECK THESE SAMPLES OF Portfolio Asset Allocation on LEE Pension Fund

Success of Product Repositioning Strategy

The main idea of this essay is to illustrate how theoretical strategic tools can be used in a real business situation to identify new business innovations and to assess how close the theory is to reality.... The author describes the real estate investment market in Russia....  … The idea of selling offices in the big office centers like private residential apartments is a perfect example of creating market space while looking across substitute industries in line with Blue Ocean Strategy described by W....
13 Pages (3250 words) Essay

Contemporary Issues in Financial Services

Financial intermediaries can be banks, building societies, financial advisor or broker, insurance companies, life insurance companies, mutual fund and pension fund.... For this, one will have to find a person who needs approximately the same amount of fund for the same time period.... Capital restructuring asset based financial intermediaries The specific requirements of customers are met by these financial intermediaries.... They provide the required asset or finance for rent or interest respectively....
8 Pages (2000 words) Essay

Investment Appraisal of Pension Fund

This paper "Investment Appraisal of pension fund" focuses on the fact that pension funds are managed by professionals with experience and expertise.... Fund Investment The pension fund is the accumulated fund, collected from the employers and employees.... The pension fund is the accumulation of funds that are invested in various investments, where the returns are generated.... The fund is collected from sources.... The fund portfolio is evaluated as how much percentage is invested in each portfolio....
9 Pages (2250 words) Assignment

Czech Republic Companies and Their Government

The economies of several Central Europe nations have taken a dramatic turn since early 1990s and Czech Republic is one such country where spectacular improvements have taken place (Knight & Webb, 1997).... The macro-economic stabilization led to supply side reforms which include… Inflow of foreign direct investment played a positive role in stabilization of the economy....
9 Pages (2250 words) Essay

Financial Intermediaries

This essay describes financial intermediaries refer to institutions, individuals or firms that play the intermediation role in a financial context, between parties.... These parties are typically a service or product provider, as the first party, and customer or consumer, second party.... hellip; They are non-banking and banking institutions which transfer funds to economic agents with a deficit unit from economic agents with surplus units....
6 Pages (1500 words) Essay

Difference between Defined Benefit and Defined Contributions Pension Schemes

These are the defined contribution plans and defined benefits plans.... The two are substantially different, and each has its unique features and characteristics.... hellip; The paper will expound on the differences between the defined contribution plans and defined benefits plans.... The discussion will conclude by The discussion will, however, start by providing background information on the two plans....
8 Pages (2000 words) Essay

The Increasing Importance of Institutional Investors

Another table (below) taken from the same source that is 'Development of Institutional Investors' show that the pension funds have grown more than any other type of institutional investor followed closely by mutual funds.... They play an important role in the allocation of these funds so that they can be used productively to benefit economic growth....
11 Pages (2750 words) Coursework

Managed Funds: Colonial First State Product Disclosure

ome of the products are (i) FirstChoice Investments (ii) FirstRate Saver (iii) FirstChoice Margin Lending (iv) Cash Management Trusts – For Investors (v) FirstChoice Personal Super (vi) FirstChoice Employer Super (vii) Rollover & Superannuation fund – For existing Colonial First State investors (viii) FirstChoice Pension.... ) In a managed fund, money from multiple investors is pooled together.... According to the investment objective, this fund is then professionally managed....
7 Pages (1750 words) Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.
Contact Us