7. Pension fund management and asset allocation

When defined-benefit pension plans are managed by life insurance companies, asmall portion of its assets is maintained as equities, whereas the pension plan contributions are mostly kept inmoney swaps .

Public pension portfolios are dominated by common stock. By contrast, private pension portfolios are evenly invested in corporate bonds, stock, and other credit instruments.

True

False

What are the benefits of a passive investment strategy? Check all that apply.

The minimum amount to be invested in real estate

A maximum rate of return on the overall portfolio

Alignment with the boards recommended long-term investment allocation

Minimization of corruption

Why might many pension fund managers argue against a passive investment strategy?

Passive investing reduces transparency of asset allocation.

Passive investing is designed to achieve only the mean performance level for each type of market represented by an index.

Passive investing results in corruption.

Passive investing results in large fees paid to investment companies.