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i have the schweser 2010 exams so if they're like the 2011 exams, SPOILER ALERT.
there's a question that says state correct/incorrect and why. here's the statement:
"for bond investors such as foundations who desire a stable stream of income, long-term bond benchmarks should be used".
so the answer is CORRECT, says LT bonds offer the investor a longer and more certain income stream. investors desiring a stable, LT cash flow should invest in longer term bonds and utilize long-term benchmarks.
not saying I disagree with any of this, but it did strike me as interesting. foundations have to generate typically the 5% spending plus mgmt plus expenses. they go for mostly a total return sort of approach and usually it's a long term to infinite time horizon, pretty high risk tolerance.
i would think given that for risk/return, that perhaps an equity type benchmark would be more appropriate or some sort of balanced index. again, i am not arguing that you couldn't benchmark a foundation to some sort of LT bond index, but at least doing this problem, it felt a little funny to me and maybe too conservative or a bit mismatched since you'd figure a foundation typically would have equities and/or other things beyond FI.
dunno, not going to dwell on it, but if anyone has thoughts or input, fire away. |
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发表于 2011-7-11 19:09
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