The Movement of Interest Rates and Asset Allocation to Alternative Investments: Cases of Public Pension Funds in North America

2021 ◽  
Vol 17 (3) ◽  
pp. 35-47
Author(s):  
Jong-Woo James Kim ◽  
Seok-Tae Kim
Keyword(s):  
North America ◽  
Interest Rates ◽  
Asset Allocation ◽  
Pension Funds ◽  
Public Pension ◽  
Alternative Investments

scholarly journals Investment outlook and Asset Allocation in US Pension Funds

2020 ◽  
pp. 38-41
Author(s):  
Rutuj Dodal ◽  
Keyword(s):  
Emerging Markets ◽  
Interest Rates ◽  
Asset Allocation ◽  
Corporate Bonds ◽  
Pension Funds ◽  
Government Bonds ◽  
Bond Returns ◽  
Investment Opportunities ◽  
The Future ◽  
Current Scenario

The classic balanced portfolio for more than 7 decades has been the blend of equities and bonds in the ratio of 60% to 40% respectively. But declining interest rates have forced investors to divert from this investing strategy and look over other alternatives. This has affected bond returns. And once again due to pandemic interest rates were cut down to near zero resulting in very little returns in bonds. To overcome this, alternative investment opportunities should be looked for and several factors which are important in deciding the future investments are to be considered. Some of them are interest rates, valuations, volatility, etc. Based upon the factors and other parameters, the best alternatives will be Equities (cyclical industry, stocks providing dividends, etc), Corporate bonds (with higher investment grades), and government bonds of emerging markets (like China and Peru). These alternatives will act as better investment alternatives to traditional 60/40 asset allocation in the current scenario.

Interest in alternative investment classes is growing

2016 ◽  
Keyword(s):  
Interest Rates ◽  
Asset Allocation ◽  
The United States ◽  
Content Type ◽  
Alternative Investments ◽  
Low Interest Rates ◽  
Near Term ◽  
Investment Portfolios ◽  
Standard Risk ◽  
Alternative Investment

Subject The increasing popularity of alternative investment asset classes in the global search for yield. Significance The prolonged period of low interest rates has negatively affected insurers, making it harder for them to meet the guarantees that are attached to life products. The challenges faced by insurers have increased attention on alternative investments. Led by the United States, global investment in infrastructure is expected to increase next year. Against this backdrop, it is useful to examine alternative investment classes and the role national regulatory regimes are likely to play in the allocation of assets to alternative investments. Impacts Increased asset allocation towards alternative investments will gradually lead to more efficient investment portfolios. Under standard risk models, capital charges for alternative investments may remain prohibitive in the near term. There is likely to be an increasing role for institutional investors such as insurers and pension funds in infrastructure investment.

The Rise of State-Owned Investors: Sovereign Wealth Funds and Public Pension Funds

2021 ◽  
Vol 13 (1) ◽  
Author(s):  
William L. Megginson ◽  
Diego Lopez ◽  
Asif I. Malik
Keyword(s):  
Hedge Funds ◽  
Private Equity ◽  
Academic Research ◽  
Pension Funds ◽  
State Ownership ◽  
Public Pension ◽  
Annual Review ◽  
Publication Date ◽  
New Governance ◽  
Sovereign Wealth Funds

State-owned investors (SOIs), including sovereign wealth funds and public pension funds, have $27 trillion in assets under management in 2020, making these funds the third largest group of asset owners globally. SOIs have become the largest and are among the most important private equity investors, and they are key investors in other alternative asset investments such as real estate, infrastructure, and hedge funds. SOIs are also leaders in promoting environmental, social, and governance policies and corporate social responsibility policies in investee companies. We document the rise of SOIs, assess their current investment policies, and describe how their state ownership both constrains and enhances their investment opportunity sets. We survey the most impactful recent academic research on sovereign wealth funds, public pension funds, and their closest financial analogs, private pension funds. We also introduce a new Governance-Sustainability-Resilience Scoreboard for SOIs and survey research examining their role in promoting good corporate governance. Expected final online publication date for the Annual Review of Financial Economics, Volume 13 is November 2021. Please see http://www.annualreviews.org/page/journal/pubdates for revised estimates.

scholarly journals Annuity Pricing in Public Pension Plans: Importance of Interest Rates

2018 ◽  
Author(s):  
Nino Abashidze ◽  
Robert Clark ◽  
Beth Ritter ◽  
David Vanderweide
Keyword(s):  
Interest Rates ◽  
Pension Plans ◽  
Public Pension ◽  
Public Pension Plans

scholarly journals A comparison of retirement saving using discretionary investment and Regulation 28

2018 ◽  
Vol 21 (1) ◽  
Author(s):  
Gizelle D. Willows ◽  
Thomas Burgers ◽  
Darron West
Keyword(s):  
South Africa ◽  
South African ◽  
Asset Allocation ◽  
Pension Funds ◽  
Investment Risk ◽  
Retirement Savings ◽  
Primary Reason ◽  
Risk And Return ◽  
Retirement Saving ◽  
Retirement Fund

Background: There is growing uncertainty in global society with regard to how retirement savings should be approached. The primary reason for this is that most societies do not save enough and their citizens run out of money during retirement. Aim: This study investigates whether the limitations imposed by Regulation 28 of the Pension Funds Act of South Africa encourage optimal asset allocation and reduce investment risk for retirement savings when contrasted with discretionary investment. Setting: The study looks at hypothetical individuals who are subject to tax and retirement consequences as administered by South African legislation. Methods: A quantitative risk and return analysis was performed while considering two hypothetical investors who are identical in all aspects other than their choice of investments. Results: The findings indicate that Regulation 28 is effective in reducing the investment risk of retirement savings; however, it may also force the investor to sacrifice wealth. Conclusion: Depending on the tax bracket in which the investor sits, discretionary investment may be preferential to investing in a retirement fund under the mandate of Regulation 28.

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