Table 1 – Strategic Asset Allocation
No Investment Type Weight Expected Return Weighted Expected Return
1 Short-Term Treasury Bills 40% 4.9% 2.0%
2 Long-Term Treasury Bond 20% 6.3% 1.3%
3 Long-Term Corporate Bond 20% 6.8% 1.4%
4 Stocks 20% 9.2% 1.8%
5 Commodities 0% 9.8% 0.0%
Portfolio Expected Return 6.4%
Portfolio Variance 0.2%
Portfolio Standard Deviation 3.9%
Portfolio Coefficient of Variation 0.61 …show more content…
The main goal of the recommended conservative portfolio is to protect the principal value of Sensible’s portfolio. Due to business nature of Sensible which heavily focus on Group Term Life, it is important to ensure that Sensible will be able to fulfill its obligation to pay claim in a shorter time period by preserve a large portion of its capital. Therefore, the recommended investment strategy is best for Sensible with a shorter time horizon and low level of risk