Evaluation of Asset Allocation Strategies used by Tanzanians’ Pension Funds and determinants of their choices

Felician, Beatrice (2013) Evaluation of Asset Allocation Strategies used by Tanzanians’ Pension Funds and determinants of their choices. Masters thesis, The Open University of Tanzania.

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Abstract

This study evaluated asset allocations strategies of the Tanzania’s pension funds in order to identify the allocation strategies and find out whether or not they conform to the modern portfolio theory (MPT). The study was exploratory in nature. A total of 12 respondents from four Tanzanian pension funds were responded to a questionnaire. Findings revealed that Tanzania’s pension funds relied heavily on the SSRA guidelines as well as the funds’ internal investment policies and guidelines when allocating funds to investment assets. The allocation strategies varied from Fund to Fund and had some aspects of the strategic, dynamic, and tactical asset allocation strategies. Most of the pension funds preferred the buy-and-hold strategy and little attempt was made towards application of optimization techniques as suggested by the modern portfolio theory. The study calls for periodic reviews of such policies and guidelines to make them relevant to the fast changing investment and market conditions, as well as having training programmes in place for building the capacity of fund managers towards optimizations techniques.

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