Portfolio Management Strategy Assignment Sample

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Introduction of Portfolio Management Strategy Assignment

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A pension plan is also considered the plan of retirement which is practical and essential in order to contribute to the several funds that were intended to support the future plan of the worker. The pool of the funds is considered to be invested on behalf of the employee along with the earnings on the amount of investment to generate the maximum number of the earnings after the worker's retirement. Moreover, the pension fund is referred to as essentially managed to ensure that the worker needs to receive all the benefits that were promised during the time of investment.


Key return objectives, strategy, constraints, as well as proposed asset allocation of the equity portfolio of pension funds:

There are several strategies that are used by the employers and the employees for seeking the security of their earnings after the time of retirement (Wahyudi et al. 2020). This basically offers various kinds of benefits along with the saving of tax and the flexibility about the investment of the money for earning the maximum amount of returns post the retirement period. The classification of the assets includes the management of the equities, corporate debts, government securities, alternative funds for investments, and so on (Boot et al. 2020). The allocation of the assets can be done through a different process that includes

Active Choice: This basically offers the highest level of flexibility during the selection of the equity proportion, corporate kind of debts, government securities along with the other investment funds within the portfolio.

Auto Choice: This basically offers an option in order to automate the association of the invested assets (Rudolph 2019). The process of Auto Choice works with the principle of maximizing the focus on the preservation of the wealth accordingly with the growth of the employment period along with the reaching closer to the period of retirement.

Key return objectives, and proposed asset allocation along with constraints, and strategy, for the bond portfolio of pension funds.

At the time of managing the portfolio of the pension funds, the management of the bond strategies can also lead to the generation of the several incomes; however, the bond portfolio management is also considered to be case sensitive with respect to the changes in the rate of interest which needs to be carefully monitored (Easton et al. 2020). Moreover, one of the active approaches for the management of the bond portfolio is considered to keep a tab on the movement of the rate of interest (Gerard 2019). Apart from that, there are several strategies that can be used for the management of the return objectives, constraints, and asset allocation of the bond portfolio of the pension funds.

Passive Bond Management Strategy

The buy-and-hold investors are considered to be passive in order to maximize the generation of the income through the emerging properties of these bonds. Moreover, the passive strategy of bond management is often considered to be a safe and possibly predictable source of income for the workers after retirement (Kurtbegu 2018). In many instances, the bonds are observed to be purchased through a premium of the discounted rate; however, the assumption about returns will stick to the full par after the maturity period of the bond.

Indexing Bond Strategy

The strategy of Indexing the bonds is considered to be the process that involves similar functional aspects but with a distinguished method of orientation. This typically focuses on providing the return along with the risk characteristics that are tied in a closed manner for indexing the target (Forsyth and Vetzal 2019). Despite having similar kinds of characteristics to the buy-and-hold kind of investment, this strategy offers some level of flexibility also. Similar to the tracking of the index of a stock market, the portfolio of the bond is considered to be structured for imitating the index of the bond.

Implementation of both models of the portfolio on the Global Investment policy of the Pension Funds

Pension funds are considered to be the most important aspect that is considered by the members of the financial market of the nation. It has been observed that the OECD countries have managed more than $15 trillion through the implementation of the equity and bond portfolio models for the pension funds in order to achieve the maximized amount of returns on the investments. This is referred to as representing an approx percentage of over 80% across the area of OECD’s GDP (Boermans and Vermeulen 2018). Implementation of the bond and the equity policies in the portfolio of the pension funds is considered to be essential because pension funds tend to play an important role in socializing and channeling the contribution after retirement according to the benefits of the financial retirement policy. The implementation of both the policies is also considered to be essential in order to promote the benefits of the pension funds in terms of financial as well as performance security. Policymakers are referred to be responsible for ensuring the effective regulation of the efficient management of the pension funds in order to meet all the objectives of the emerging pension plans.

Implementation of both the bond and the equity portfolio management in the policies of the pension funds helps maintain the regulatory framework. This is considered to be essential to remain focused on maintaining the accordance of the performance of the pension funds with the proper objectives (Krci? et al. 2021). Along with the other important aspect of the regulatory framework, the prudent person standard and the standard investment policies are considered to be essential and can be managed efficiently through the use of these portfolio management strategies. The implementation of the portfolio strategies along with the maintenance of the regulations also tends to include the quantitative limits in order to promote the principles of prudential security, liquidity pursuant along with the amount of profitability which also includes the investment of the assets (Rudolph 2019). The limitation on the investments with respect to the inclusion of the assets and according to the guidelines of OECD can also be managed through the help of the implementation of these policies.

Optimization of the policies and the impacts of Covid-19 on the BTA group pension fund

In order to design a suitable plan for retirement, the increase in the number of the institution of the pension funds has supported the employees and the employers in various ways. Furthermore, the increase in the number of pension funds institutions can result in the strengthening of the stock and the bond market of the nation (Guseva et al. 2018). These pension funds institutions are considered to have separate funds along with the resources for the determination of the diversification of these portfolios through different kinds of assets as well. And hence through the implementation of the equity and bond portfolio strategies, the pension fund institutions can focus on obtaining all the suitable objectives (Obasa 2019).

Optimization of the portfolios can include the maximization of the expected returns of the interests for the contribution of the invested amount to the level of risks. Consideration of the future value for the investments along with the changes in the amount in the risk level tends to the identification of the various insights that are consistent with the context of optimization of the strategy of the portfolio implementation process (Easton et al. 2020). The process of optimization of the strategy of portfolio implementation tends to have a hedging component along with a longer duration as compared to the real span of the returns through the investment in the pension plans. Moreover, this is also considered to be starting the return of the invested amount throughout the lifetime of the employee after retirement.

The impact of the Covid-19 on the BTA group pension fund can be considered to be still emerging. Moreover, these impacts of the Covid-19 pandemic intended to affect the ability of the contribution of the people the pension funds along with the rates of returns on the investment due to the decrease in the amount of investment as well as the demographic experience also (Gerard 2019). These impacts are referred to be varying remarkably according to the diversification of the pension plans which are typically dependent on the economic disruption of the demographic region as well as the members of the plan as well. The most remarkable impact on pension plans is considered to be caused by the disruption of the economy during the pandemic situation. Moreover, the state and the localized governments have intended to focus on the exploration of the various kinds of measures that can help the government to balance the budgets which are further directly or indirectly connected with the level of contribution of the people of the nation (Guseva et al. 2018). The impacts that are identified to be long term are mostly referred to be pressurizing the budget along with the uncertain persistency of the lower level of rates of interest which basically tends to the reduction of the rates of returns on the investment along with making the sponsorship for the plans more difficult in respect to the investments.


Through this report, there are different aspects of the pension funds that have been projected. The implementation of the equity portfolio strategy along with the bond portfolio strategy has been projected in this report. The advantages of the implementation of these strategies in the pension funds along with their impacts are also highlighted. Moreover, the optimization of these strategies along with the impacts of the Covid-19 on the pension funds is also projected in this report.


Boermans, M. and Vermeulen, R., 2018. Quantitative easing and preferred habitat investors in the euro area bond market. Netherlands Bank, DNB Working Papers, (586).

Boot, A.W., Carletti, E., Kotz, H.H., Krahnen, J.P., Pelizzon, L. and Subrahmanyam, M.G., 2020. Corona and financial stability 4.0: implementing a European Pandemic Equity Fund (No. 84). SAFE Policy Letter.

Easton, P.D., Larocque, S. and Sustersic Stevens, J., 2020. Private equity valuation before and after ASC 820. Available at SSRN 3314992.

Ennis, R.M., 2022. Cost, Performance, and Benchmark Bias of Public Pension Funds in the United States: An Unflattering Portrait. The Journal of Portfolio Management, 48(5), pp.138-150.

Forsyth, P.A. and Vetzal, K.R., 2019. Defined contribution pension plans: Who has seen the risk?. Journal of Risk and Financial Management, 12(2), p.70.

Gerard, M.M., 2019. Reform Options for Mature Defined Benefit Pension Plans: The Case of the Netherlands. International Monetary Fund.

Guseva, I.A., Kulikova, E.I., Rebelsky, N.M. and Arkhipova, L.S., 2018. Functional Improvement of Non-State Pension Funds as Mechanism of Investment in Russian Economy. Journal of Reviews on Global Economics, 7, pp.457-463.

Krci?, M., Kola?ko, V. and Kokotec, I.?., 2021. Investment Risk And Efficiency Analysis Of Croatian Pension Funds. UTMS Journal of Economics, 12(2), pp.186-203.

Kurtbegu, E., 2018. Replicating intergenerational longevity risk sharing in collective defined contribution pension plans using financial markets. Insurance: Mathematics and Economics, 78, pp.286-300.

Obasa, S.O., 2019. A Comparative Analysis of the Implementation of the Defined Contributory Pension Scheme in Nigeria and Chile. Review Pub Administration Manag, 7, p.261.

Rudolph, H.P., 2019. Pension funds with automatic enrollment schemes: Lessons for Emerging Economies. World Bank Policy Research Working Paper, (8726).

Wahyudi, S., Hasanudin, H. and Pangestutia, I., 2020. Asset allocation and strategies on investment portfolio performance: A study on the implementation of employee pension fund in Indonesia. Accounting, 6(5), pp.839-850.

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