The Effect of Asset Allocation on the Financial Performance of Pension Schemes in Kenya
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Date
2016-10Author
Ndung’u, Michael N
Type
ThesisLanguage
enMetadata
Show full item recordAbstract
The relationship between asset allocation and financial performance of pension funds is
critical in determining whether asset allocations as selected by fund managers of pension
schemes is critical in influencing the financial performance of pension funds resulting in
better retirement benefits for pensioners. The main objective of this study was to determine
the effect of assets allocation on the financial performance of pension schemes. This
research was conducted through a descriptive survey and utilized secondary data available
from RBA and Fund Managers. From the study, it was found out that there is a linear
correlation between fund performance and the returns of the various asset classes with the
strongest correlation being between overall fund performance and returns in Equities, fixed
deposit and Government securities. From a population of 1297 schemes in Kenya, the
findings of the study showed that asset allocation explained 89.5% of the variability of fund
performance and that 10.5% 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. The study recommended that a related review
should be carried out replacing actual weights of assets with a departure/deviation from the
weights recommended by RBA to determine if the same conclusions of the study will still
hold.
Publisher
University of Nairobi
Rights
Attribution-NonCommercial-NoDerivs 3.0 United StatesUsage Rights
http://creativecommons.org/licenses/by-nc-nd/3.0/us/Collections
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