Pension fund management and international investment – A global perspective

Emerging Market Pension Funds and International Diversification

“…Finally, Burtless (2007) looks at the role of international diversification for eight industrialized countries and finds that generally they could obtain higher pension payments and less shortfall risk if they invest part of their assets outside of their home countries. Similar findings for industrial countries are also provided in Davis (2002b).…”

A Review of Foreign Investments Allowance for Pension Funds in Zimbabwe

“…Roldos (2004) concludes that restriction on asset allocation and foreign investment are usually meant for macroeconomic stability but highlights the need for close monitoring and proper timing in effecting any changes. However Davis (2002) discourages the enforcement of tighter limits on foreign investments and suggests that it should be left to the market, a practice well adopted in the USA and the UK despite modest PAs levels.…”

“…Bodie and Merton (2002) propose an arrangement similar to conventional currency swaps whereby; based on a principal amount, a small-country pension fund with domestic equity holding (in US dollars) could swap the local stock market return per dollar for the total return per dollar on a market-value weighted-average of the world stock markets with a global pension intermediary (GPI). Stewart & Yermo (2008), Oxera (2007 and Davis (2002) agree that trustee related costs and other factors such as governance through the agency problem, fund size and domestic market liquidity, have had a profound bearing on pension funds performance. These factors have been catalysed by limited jurisdiction of the regulator in some countries and the influence from large Pension Funds.…”

“…Potential explanations of home bias vs cross-border investing have been presented as; taxes and transaction costs, allocation limits, information costs and asymmetries, conservative mandates, different currencies/accounting standards, the physical/economic distance between two countries, language or religious differences and returns benchmarking based on local market, (Davis (2002), Tapia (2008), Sinha andFiestas (2011) andASX &Rusell Investments (2011)). Poor legal protection of minority shareholders and even the governance on a country level also make foreign investment less attractive.…”

Attitudes, savings choices, level of knowledge and investment preferences of employees toward pensions and retirement planning: Survey evidence from Barbados

“…4 -6 It is common knowledge that this shift from DB to DC schemes has placed greater responsibility on the pension holder (in terms of the capital and asset allocation surrounding their contributions), and this may result in inadequate or sub-optimal investment decisions. 7,8 This argument underlies the notion of irrationality inherent in human thoughts and actions and goes against traditional economic perspectives. Other factors which may affect investment decisions have deemed to be more relevant, and include a range of behavioural biases.…”