muideen-abubakar / retirement-fund-investment-strategy

Retirement-Fund-Investment-Strategy

Our client is a highly-respected large cap company which has a significant sum of assets in their corporate pension, and would like one component of their pension assets to be invested in a fixed-maturity, multi-asset scheme with a regular payout.

The main characteristics of this special portion of pension are the following:

• All assets will be given back to the retirees in 10 years
• The initial investment is $120M, and each month, the payout should be MAX($1.002M,P), where P is the 1/n fraction of total remaining assets each month, and where n is the number of remaining months to the maturity (i.e. 1/120 for the first payout and 1/119 for the second etc)
• It is in the retiree’s interest to maximise P
• If the remaining total assets become less than $1.002M, however, the company is liable to meet the shortfall

The aim is to develop a strategy to meet the above investment objectives and constraints by using the data attached.

The analysis would cover the following:

• The proposed investment strategy and how it was created.
• Why would our client should implement this strategy?
• How likely our strategy will lead the client to the case of having to meet any shortfalls
• The strategy will be supported by using the historical data provided