Assume you are advising a pension fund for a city's police and fire departments The amount under management is $100 million Currently, the contributions from the pension fund members are approximately the same as the fund's outflows This cash flow balance is expected to be unchanged for the next few years Provide a detailed outline of how the bond component of the investment portfolio should be managed Currently, the portfolio is roughly 50 equity (indexed to the S P 500) 5 cash equivalents 45 long term debt (No need to comment on this overall allocation ) Specifically, provide a set of guidelines , for example, four or five restrictions on permissible investments, transactions, and overall portfolio characteristics that effectively control the total amount of risk in the bond portfolio while still allowing reasonable return expectations

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Posted on Oct 02, 2024

Assume you are advising a pension fund for a city's police and fire departments. The amount under management is $100 million. Currently, the contributions from

Assume you are advising a pension fund for a city's police and fire departments. The amount under management is $100 million. Currently, the contributions from the pension fund members are approximately the same as the fund's outflows. This cash flow balance is expected to be unchanged for the next few years.

Provide a detailed outline of how the bond component of the investment portfolio should be managed. Currently, the portfolio is roughly:

50% equity (indexed to the S&P 500)
5% cash equivalents
45% long-term debt
(No need to comment on this overall allocation.)

Specifically, provide a set of guidelines, for example, four or five restrictions on permissible investments, transactions, and overall portfolio characteristics that effectively control the total amount of risk in the bond portfolio while still allowing reasonable return expectations.