| dc.description.abstract | Much of the previous research into the effect of asset allocation on the financial
performance of pension funds has concentrated generally on developed countries with
few studies being carried out in emerging markets. Not much local study has focused on
establishing this critical relationship. This study therefore sought to fill the existing
research gap by carrying out a survey study on the effect of asset allocation on the
financial performance of pension funds in Kenya. The main objective of pension funds is
the provision of retirement and other benefits to the employees and their respective
dependants as provided in the Trust Deed and Rules of the pension fund. The impact of
portfolio asset allocation on the financial performance of pension funds in Kenya is
critical in determining whether asset allocation as selected by Fund managers who are
mandated by Trustees of Pension funds to carry out the investment function has an
impact of either reducing or increasing the overall financial performance of the Fund
assets. The study adopted a descriptive survey and utilized a sample of 40 schemes drawn
from a population of 1232 schemes in Kenya.The findings of the study showed that asset
allocation explained 58% of the variability of fund performance and that 42% was due to
other factors such as the manager’s selection, timing of investments and securities
selection within as asset class and the management style adopted by the fund managers of
the fund. Further the study established that of all the asset classes permitted by the
Retirement Benefits Authority (RBA), investments in Government securities, property,
cash deposits and quoted shares was relatively more important in determining the overall
performance of the pension funds. | en_US |
