TITLE:
A Case for Real Estate Inclusion in Pension Funds Mixed-Asset Portfolios in Tanzania
AUTHORS:
Moses Mpogole Kusiluka, Sophia Marcian Kongela
KEYWORDS:
Real Estate Investment, Portfolio Allocation, Pension Funds’ Investments, Tanzania
JOURNAL NAME:
Current Urban Studies,
Vol.8 No.3,
September
16,
2020
ABSTRACT: Traditionally, pension funds
invest heavily in fixed income securities. More recently, pension funds have
also been increasing their exposure to non- conventional
asset classes including real estate. Over the last two decades, pension funds in Tanzania
have increased their real estate allocations to more than 18%, which is
relatively higher compared to the international practice. This paper looks into
investment practice by pension funds in Tanzania with a view to examining whether real estate inclusion contributes to the
attainment of optimal portfolios. The study entails mean-variance optimisation
analysis of pension funds’ portfolios, covering a period between 2009 and 2018.
Findings show that real estate inclusion in pension funds’ portfolios has risk reduction potential. This paper enriches
literature on pension funds’ investment practice, particularly those in the
countries that are characterised by nascent capital markets
institutions. The study also compares conventional literature on pension funds
investment practice and the reality on the ground.