Lux Investing
U.S. subprime mortgage affect on fixed income securities?
Assuming that now is the end of Aug. 2007. You are the manager of a pension fund that invests about 70% of its asset in high-grade long term fixed income securities, 20% in blue-chip stocks, and 10% in money market instruments. Please explain the effect of the current market turmoil on your portfolio.
Public Comments
- Your 20% stock portfolio will lose value, especially if you have those companies in financial dealings. Your 10% money market was devalued a bit by the Fed reducing interest rates. Your 70% long term securities if in bonds, their percentage rates stay the same, but their actual value may have been reduced also.
