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Topic 3: Asset Allocation and Institutional Investors

Equity/Bonds/Cash

Hey Guys,

So I currently have the investment strat of 60% Equity (Mainly trackers S&P, some EM trackers etc)/23% bonds (USD treasury ETF) and 17% Cash (In the event for market turmoil - which I expect - I am able to purchase more cheap equity).

Any agreements? 5-year horizon with Moderate risk profile

How to interpret Risk Parity Formula

Hello, 

How do you interpret the formula of Risk Parity. It has a “inverted 6” in the numerator and denominator. What do they mean?

Thanks for the help.

Can someone explain to me this answer about balance of payment?

Hello, 

I’m practicing Schweser exams for CAIA Level 2 and correcting the Exam n° 1 Section 1 there is a question under the Topic Asset Allocation that has the following answer: 

“Substantial current account surplus will result in currency reserve deficits in the financial (capital) account”.

pension plan fund size affecting risk tolerance

In uppermark it says

“sponsors with large plan liabilities relative to the size of their assets have high risk tolerance.”

Shouldn’t such sponsors have a low risk tolerance because liabilities is bigger than the size of asset?