Guidelines for a Trust What type of general guidelines may be specified for a trust that is managing a pension fund?
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Guidelines for a Trust What type of general guidelines may be specified for a trust that is managing a pension fund? |
Explanation
Trust departments of various financial institutions often manage pension funds. They invest the pension funds on the behalf of the employees who receive the benefit upon retirement. They are entrusted with the responsibility with respect to the investment of funds but the ambit of the flexibility of their power of decision making is guided by the guidelines mentioned in the answer. The motive of these guidelines to the investment of these funds should be based on sound decision metrics.
Verified Answer
The percentage of the portfolio that can be invested in stocks or bonds.
The desired minimum rate of return that the investment should earn.
The maximum amount to be invested in real estate.
The minimum level of acceptable quality rating of bonds.
The maximum amount to be invested in any industry.
The average maturity period of the bonds.
The maximum amount to be invested in options.
The minimum size of the companies in which the investment can be made.
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