Long-term portfolio investments: New insight into return and risk

Alexander Abramov, Alexander Radygin and Maria Chernova

Russian Journal of Economics, 2015, vol. 1, issue 3, 273-293

Abstract: This article analyzes the impact of the increase of an investment horizon on the comparative advantages of the basic asset classes and on the principles of constructing the investment strategy. It demonstrates that the traditional approach of portfolio management theory, which states that investments in stocks are preferable over bonds in terms of their long-run risk–return trade-offs, is by no means always consistent with empirical evidence. This article proves the opposite, i.e., that for long-term investors, investments in corporate bonds are more profitable in terms of the risk–return ratio than investments in stocks, arguing in favor of strategies pursued by pension funds and other institutional investors focused primarily on investments in fixed-income instruments, including infrastructural bonds.

Keywords: retirement savings; long-term investments; investment horizon; stock and bond returns; stock and bond investment risks; portfolio diversification (search for similar items in EconPapers)
JEL-codes: D14 G11 G12 G15 G17 G23 H55 (search for similar items in EconPapers)
Date: 2015
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Journal Article: Long-term Portfolio investment: New insight into Return and Risk (2015)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:rujoec:v:1:y:2015:i:3:p:273-293

DOI: 10.1016/j.ruje.2015.12.001

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