Simplified Chinese language
Subject category:
Finance, Accounting and Control
Published by:
Ivey Publishing
Version: 1997-01-22
Length: 11 pages
Data source: Field research
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Abstract
This is the simplified Chinese version of ''9A97N003''. In 1994, William Booth, a member of the management team of the Ontario Teachers'' Pension Plan Board, was asked to re-examine the diversification strategy that the $30 billion fund had been pursuing since its inception and to determine an optimal long-term asset allocation policy for the fund. After inheriting a portfolio that consisted entirely of fixed- income securities in 1990, by the end of 1993, the allocation to equity was only 20% short of a 1995 interim policy target of 66%. Booth''s primary task was to determine whether the shift in asset mix should stop at 66% equity in 1995, which was above the allocation to equities for the average pension plan, or whether it should continue to some higher amount (an independent consultant recommended an 80% allocation to equity). Booth knew that a higher allocation to equities would likely increase total returns over the long-term, thereby reducing the cost of funding the plan. However, equities exhibited greater volatility than bonds and a higher allocation to equities therefore created some risk that future funding costs might rise above current levels.
Subject category:
Finance, Accounting and Control
Published by:
Ivey Publishing
Version: 1999-02-22
Length: 15 pages
Data source: Field research
About
Abstract
This is the simplified Chinese version of ''9A97N003''. In 1994, William Booth, a member of the management team of the Ontario Teachers'' Pension Plan Board, was asked to re-examine the diversification strategy that the $30 billion fund had been pursuing since its inception and to determine an optimal long-term asset allocation policy for the fund. After inheriting a portfolio that consisted entirely of fixed- income securities in 1990, by the end of 1993, the allocation to equity was only 20% short of a 1995 interim policy target of 66%. Booth''s primary task was to determine whether the shift in asset mix should stop at 66% equity in 1995, which was above the allocation to equities for the average pension plan, or whether it should continue to some higher amount (an independent consultant recommended an 80% allocation to equity). Booth knew that a higher allocation to equities would likely increase total returns over the long-term, thereby reducing the cost of funding the plan. However, equities exhibited greater volatility than bonds and a higher allocation to equities therefore created some risk that future funding costs might rise above current levels.
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Subject category:
Finance, Accounting and Control
Published by:
Ivey Publishing
Version: 1999-02-22
Length: 15 pages
Data source: Field research