Adding "value" to sustainable post-retirement portfolios

Balanced mutual funds, long used in individual retirement plans, have increased in popularity in recent years, partly because they are one of three qualified default investment alternatives in employer-sponsored retirement plans. Using mean-reverting valuation metrics, we design semi-passive balance...

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Bibliographic Details
Published in:Financial services review (Greenwich, Conn.) Conn.), 2012-03, Vol.21 (1), p.19
Main Authors: Gupta, Neeraj J, Pavlik, Robert, Synn, Wonhi
Format: Article
Language:English
Subjects:
Analysis
Asset allocation
Behavioral economics
Bond portfolios
Bootstrap method
Decision making
Defined contribution plans
Design
Earnings
Economic crisis
Employee benefits
Employees
Employers
Equity
Forecasts and trends
Investment analysis
Investments
Lifecycle funds
Portfolio performance
Profits
Ratios
Retirement planning
Retirement plans
Stock exchanges
Stock markets
Studies
Valuation
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Summary:Balanced mutual funds, long used in individual retirement plans, have increased in popularity in recent years, partly because they are one of three qualified default investment alternatives in employer-sponsored retirement plans. Using mean-reverting valuation metrics, we design semi-passive balanced fund portfolios with significantly lower shortfall rates and higher remaining balances than those found in studies like Bengen (1994) and Spitzer and Singh (2008). The results from our study, using rolling periods and bootstrapping simulation methods, indicate that our valuation-based portfolios unambiguously outperform both conventional balanced funds and target-date funds, and that they should be included as additional offerings in retirement plans. [PUBLICATION ABSTRACT]
ISSN:1057-0810
1873-5673