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Portfolio Asset Allocation on LEE Pension Fund - Research Paper Example

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Asset allocation is critical to the any investment performance plan. The paper has inspected how alternative mix-assets allocation on Pension Fund can be useful. It has particularly addressed the concern of whether…
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Portfolio Asset Allocation on LEE Pension Fund
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Download file to see previous pages ate bonds had the lowest correlation (-0.011827), implying it would be a desired asset for risk reduction, among the portfolios, by means of increased diversification. Standard deviations (SD) and means were also calculated in order to give a relative comparison between the different asset classes with regard to return and risk.
Before 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 of bonds, stocks, and cash. However, this situation was changed as inflation and modern portfolio theory caused the establishment of real estate one institutional investment asset class. The current undesirable performance in equity market implies real estate is progressively registering mixed-asset portfolio. 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 exist to prove whether real estate ought to play an unswerving function in mixed-asset portfolio across long-term and short-term investment horizons. We intend to explore and give more light with regard to the uncertainty surrounding mixed-asset portfolio. This was our primary concern as far as this paper is concerned.
So as 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 the turbulent market cycles. Every systems 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 ...Download file to see next pagesRead More
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