Investment fund selection techniques from the perspective of Brazilian pension funds

ABSTRACT The aim of this article was to evaluate the effectiveness of investment fund selection techniques from the perspective of Brazilian pension funds. Asset liability management (ALM) and liability driven investment (LDI) strategies are usually adopted to guide pension fund managers in relation to strategic allocation in asset classes that should compose their investment portfolios and to the liquidity needed in each period, but not specifying in which assets to allocate resources from among the infinity of assets available in the financial market. This article contributes to tactical management in the fixed income and stock segments outsourced via funds and demonstrates that adopting simple indicators can increase investment performance. The article broadens the knowledge on pension fund investment decisions and creates confidence in the adoption of the Sharpe ratio as a technique for choosing investment funds. We analyzed the returns obtained by hypothetical portfolios built using the following techniques: (i) the Sharpe ratio; (ii) the alpha of a multifactor model; (iii) data envelopment analysis (DEA) efficiency; and (iv) the different combinations of these techniques. We considered information on 369 funds from 2013 to 2018, adopting 12 temporal windows for choosing and re-evaluating the portfolios. The returns obtained were compared with the mean actuarial goal of the benefits plans administered by the pension funds, by means of the unplanned divergence (UD). When outsourcing pension fund investments in fixed income and stock investment funds it was verified that the Sharpe ratio contributes significantly to pension fund performance, compared with other indicators and techniques or a combination of them.

Socio-Economic Impact of the Interest-Free Community Investment Fund: A Case Study of Rural Sindh, Pakistan

This study aims to measure the impact of an intervention, the Community Investment Fund (CIF), on the socio-economic life of rural women. CIF is a community-managed fund aimed at improving the living standards of women by empowering them to undertake income-generating projects to become financially more stable and self-governed in the Khairpur, Shikarpur, Kandhkot-Kashmore and Jacobabad districts of Sindh, Pakistan. This study used a quasi-experimental design approach that involved two groups, i.e., the treatment group (beneficiaries) and control group (non-beneficiaries). The sample size of this study was 708 respondents including the treatment and control group. The results of comparison of mean indicate that there is a significant difference between treatment and control group in terms of socio-demographic variables (including monthly income and consumption, saving amount, total asset value, an asset purchased value and household diet) and women empowerment’s indicators, thereby suggesting that CIF has resulted in women empowerment. Concerning the results of the poverty scorecard, the higher graduation of beneficiaries (treatment group) asserts that the intervention of CIF has also a positive impact on targeted beneficiaries. In particular, the findings indicate that 72% of beneficiaries (treatment group) have graduated from one poverty band to another higher band compared to 59.4% of non-beneficiaries (control group) in poverty score. In addition, the findings of the logistic regression analysis confirmed that participation in the CIF program empowers women beneficiaries. This study will support policymakers to further improve CIF so that it can become more effective and sustainable.

Competitiveness of the Russian Banking System: Cross-Border Aspect

The processes of globalization and cross-border relations between countries have made it possible to carry out work and provide services in the markets of another country. In the conditions of the banking sector, this process is expressed in the branches of foreign banks or by investing money in the authorized capital of an existing bank. In this case, the management process is located in another country. Foreign investment in all sectors plays an important role in the development of the economy. The classification of commercial banks depends on the source of financing of the authorized capital. The article analyzes the impact of foreign investment on national banking organizations. The growth in the number of commercial banks exacerbates competition in the country. Market participants increase their competitive advantages by introducing additional banking services. The banking sector includes the authorized capital of non-residents, so the bank’s strategy is developed by citizens of another country, taking into account national characteristics. While the foreign banking industry is more likely to overtake domestic technologies, innovations increase the level of competition by adapting foreign mechanisms to Russian markets. The purpose of the study is to analyze the competitive advantages of the national banking sector, taking into account foreign capital. In order to determine whether the policy of a foreign bank affects the atmosphere of the national market, it is necessary to study the industry leaders, measure the share and scale of non-resident banks, using the calculation of the Gerfindahl-Hirschmann market concentration index. The results obtained can reasonably describe the banking market, describe the risks and ways of development of the industry, taking into account the need for an investment fund.

Public administration strategy of healthcare system for seniors

The goal of the study is to restructure society’s attitude toward the needs of the elderly. The article addresses the methodology of state social policy and possible innovations in funding and economic methods for public administration in the healthcare system for seniors. The novelty of the work is ensured by the concept of managed older age and a start-up proposal to create the State Direct Investment Fund “Senior Generation” functioning as an entity responsible for the development of the organizational foundations for gerontology and geriatrics services. The practical significance of the study lies in the optimization of the modern management model of care for the older generation and a philosophical study of age as a potential in management in both individual and societal regards. This strategy can serve as a basis for public administration of the healthcare system for the elderly accounting for the diversity of seniors as a social stratum.

A Critical View on Pension Savings in Slovakia

In almost all countries around the world, pension systems are based on several pillars. This is also the case of Slovakia with its three-pillar pension system. The paper presents a case study underlying the risks that can seriously affect the amount of future pensions. The case study clearly indicates that current pensions in Slovakia paid under all three pillars do not correspond with the expectations from the implementation of the three-pillar pension system. The aim of the paper is to the risks that can seriously affect the amount of future pensions. Our own contribution is the determination of the amount of pension for a specific pensioner specified in the presented case study. Within the saving phase of pension contributions the development of investment fund returns, the amount of future pensioner´s contributions, as well as administrative costs are analyzed on a monthly basis. The payout phase is modelled using actuarial functions applying the mortality tables of Slovakia.

USE OF TRADING TO INCREASE PROFITABILITY OF SECURITIES PORTFOLIO IN INVESTMENT FUNDS

It is determined that in investment processes, each percentage of returns is important. The hypothesis was considered that active management of the stock portfolio through intensive trading is a potential way of significantly improving the level of efficiency of investments in the stock market. The purpose of the work was to study the feasibility of using trading to increase the profitability of the securities portfolio and, in particular, for institutional investors. Trading of shares (intensive purchase and sale) is considered as a factor in increasing the profitability of investments in shares. The shortcomings of the intensification of trading are specified, which consists in an increase in taxes, brokerage commissions and lost profits due to the expectation of a better date for entering the transaction. As a research method, modeling based on the data of a three-year period of dynamics of Microsoft shares and hypothetical companies was used. The corresponding modeling made it possible to draw the following conclusions: the increase in trading intensity does not guarantee an increase in the level of investment efficiency; the increase in trading intensity leads to an increase in the tax burden and risk level, which ultimately neutralizes efforts on intensive trading. Investment funds which are actively managed and use intensive trading in activities do not have a significant advantage over funds that have passive management. The basis of the efficiency of investment funds is the minimization of overhead costs, including by minimizing taxes due to the reduction of the level of trading intensity to zero. It is important to pre-envisage promising shares for purchase, and keep them in their own portfolio for a long period of time with a minimum level of portfolio balancing intensity. Rebalancing the stock portfolio on the principle of profit fixing leads to an increase in tax payments and neutralizes capital growth opportunities due to the sale of shares with high growth potential. Keywords: trading, shares, investment fund, rebalancing of securities portfolio. JEL Сlassification G11, G14, G20 Formulas: 0; fig.: 4; tabl.: 5; bibl.: 14.

Financial Technology and Hedge Funds

Hedge funds have been on the leading edge of technology in finance with the use of big data, artificial intelligence, machine learning algorithms, and blockchain technology. This chapter examines how and why private fund advisors utilize emerging technology. Some indicia suggest that emerging technology plays a primary role in front office and investment functions, in the securing of crypto assets, but also in private investment fund managers’ attempts to satisfy the growth expectations of clients. The use of emerging technology in trade execution and other back-office functions goes hand-in-hand with an ever-increasing interest in the private investment fund industry in investing in digital assets.

FUNDAMENTAL PROBLEMS OF INVESTMENT FUNDS IN UKRAINE FROM THE POINT OF VIEW OF COMPLEMENTARY PENSION PROVISION OF CITIZENS

The relevance and urgent need for the formation of complementary pension provision for the population in Ukraine has been determined. The complementary pension provision of the citizens of the country is considered as not at all implying the complete destruction of the existing solidarity pension system, but only the formation of additional mechanisms that make the pension provision of citizens generally successful even in the existing conditions. Such a mechanism can be a set of investment funds (joint investment institutions) in the country, which will add to the existing solidarity pension system elements of capital accumulation through the activation of investment processes. The purpose of the work was to determine the fundamental problems and prospects of Ukrainian investment funds (joint investment institutions) from the point of view of complementary pension provision for citizens in Ukraine. The purpose of the work was to determine the fundamental problems and prospects of Ukrainian investment funds (joint investment institutions) from the point of view of complementary pension provision for citizens in Ukraine. The article defines that the prerequisite for effective complementary provision is the optimal balance structure, which is similar to such better analogues as the Berkshire Hathaway and the Vanguard S & P 500 ETF. It is specified that the formation of a balance sheet structure in accordance with the best foreign analogues contradicts the current regulatory framework in the country, which is a fundamental problem in the formation of complementary pension provision on the basis of joint investment institutions. It is determined that the majority of investment funds existing in Ukraine in the form of joint investment institutions (ISI) under the current legislation are not able to provide a complementary pension for citizens of the country at a sufficient level of efficiency due to the impossibility of forming an optimal asset structure. The fundamental problem of ISI in the country is the legislative restrictions on the formation of the optimal structure of their balance. The optimal balance sheet structure of the investment fund, in particular assets (dominated by shares of the world’s leading companies) and liabilities (dominated by equity and raised funds by issuing bonds) is the basis for the effectiveness of complementary pension provision.