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Expert¡¯s Comments:
The above-mentioned process for the formulation of an investment strategy is a technical and mathematical process that is really very complicated though looks simple, and involves multiple parties including the principal, the trustee, the investment manager and the custodian with huge financial and opportunity costs. Therefore it is not suitable for all enterprises, especially for most SMEs. There may also be another problem involved, i.e. there are two operational modes of the occupational annuity investment. One is the individual operational mode, especially formulating an investment strategy and portfolio and conducting independent management, the other is the joint operational mode. That means selecting a suitable investment portfolio from the investment manager¡¯s existing portfolios. These two modes have different application properties (Table 1).
Table 1: Two Investment Operational Modes of Occupational Annuity
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Joint operation
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Individual operation |
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Mode and characteristics |
Independent, and able to choose portfolios or standard products provided by the investment manager with a good market brand and history performance. |
Entrusting is fulfilled in the form of an entrustment management agreement. Able to propose its own requirements for investment strategy, asset allocation, risk control etc. |
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Investment scope |
Various investment portfolios or standard products especially for occupational annuity plans. |
Ability to define the specific investment proportions for stocks and bonds and to raise the investment limitation. |
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Period |
Generally able to convert portfolio at any time according to contractual stipulations |
Having relatively constant phase requirements |
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Profitability/ Risk
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As required by the investment strategy of standard portfolio |
As required by the customized investment strategy |
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Liquidity |
Strong
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Customized as required |
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Professional requirements for investment |
Weak, selecting products existent
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Strong, and following up the whole process of formulating a strategy | |
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