Investment Policy at New England Healthcare
Posted: 5 Jul 2006
Date Written: July 3, 2003
SUBJECT AREAS: Asset Allocation, Asset management, Investments, Investment Management, Risk Management, Liability, Pension funds
CASE SETTINGS: New England; Health care industry; $4.2 billion revenues; 2003
This case examines the design of long-term asset allocation policies in the context of a large healthcare institution (New England Healthcare, or NEH) which has three long-term pools of funds: an endowment fund, a cash-balance (CB) pension plan, and a defined-benefit (DB) pension plan. The investment committee at NEH has traditionally adopted a "one size fits all" approach to asset allocation, and has chosen similar investment policies for the three pools of funds. However, upon examination of the different liability structures of these three funds, their relationship to each other, and the importance of these funds to NEH's operations, the investment committee is considering setting a different asset allocation policy for each.
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