Template-Type: ReDIF-Article 1.0
Author-Name: Alexander E. Abramov
Author-Email: ae_abramov@mail.ru
Author-Workplace-Name: Institute for Applied Economic Research, Russian Presidential Academy of National Economy and Public Administration 
Author-Name: Alexander D. Radygin
Author-Email: arad@rane.ru
Author-Workplace-Name: Russian Presidential Academy of National Economy and Public Administration; Gaidar Institute for Economic Policy
Author-Name: Maria I. Chernova
Author-Email: marychernova@gmail.com
Author-Workplace-Name: Institute for Applied Economic Research, Russian Presidential Academy of National Economy and Public Administration
Title: Equity vs. Bonds for Long-term Investors
Abstract: The paper presents a comparative analysis of investment potential of equity and bonds for long-term investors. It continues our previous research (A. Abramov, A. Radygin, M. Chernova, 2015) on the influence of investment horizon on risk-return trade-off between equity and bonds. This article discusses in detail the issue of asset allocation between equity and bonds for pension funds’ portfolio. The study is based on the approach that involves constructing portfolios with the same start date. This analysis confirms the hypothesis of the absence of significant influence of investment horizon extending on comparative advantages of equity versus bonds by risk-return criteria. The results are confirmed with the evidence from Russian and American financial markets. Because of this fact asset management of pension savings focuses on bond investment rather than on equity investment in most OECD countries.
Classification-JEL: G11, G17
Keywords: pension savings, long-term investment, investment horizon, equity and bond return, equity and bond risk, portfolio diversification
Journal: Finansovyj žhurnal — Financial Journal
Pages: 26-44
Issue: 3
Year: 2016
Month: June
File-URL: http://www.nifi.ru/images/FILES/Journal/Archive/2016/3/statyi_3/03.pdf
File-Format: Application/pdf
Handle: RePEc:fru:finjrn:160303:p:26-44