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Investment Parameters

Investment Parameters

Investment Parameters
1.

Safety, liquidity and performance principles.

2.

Markets that have a low correlation with the economic performance of the member countries.

3.

Liquid and deep markets, with low transaction costs.

4.
Issuers with a minimum investment grade credit rating of A-/A3/A- for the medium term and A-2/P-2/F2 for the short term.
5.

Moderate market risk profile regarding duration and terms.

Strategic asset allocation

FLAR has extensive experience in Strategic Asset Allocation (SAA) design. In 2015, FLAR adopted a three-year nominal capital preservation target for its wealth investment portfolio.

Consistent with this objective, the benchmark index approved by the Board of Directors in March 2023 is as follows:

  • U.S. Treasury Bonds, maturity between 0-1 years: 33%

  • Corporate Bonds, credit rating between AAA-A, maturity between 0-1 years: 25%

  • U.S. Treasury Bonds, maturity between 1-5 years: 10%

  • U.S. Treasury Inflation-Protected Securities (TIPS), maturity between 1-5 years: 5%

  • Corporate Bonds, credit rating between AAA-A, maturity between 1-5 years: 10%

  • Supranational, Agency, and Sovereign Bonds (SSA), credit rating between AAA-A, maturity between 1-5 years: 10%

  • Mortgage-Backed Securities issued by U.S. Agencies (Agency MBS): 5%

  • U.S. Large Cap Equities (S&P 500): 2%

  • 0 to 1 year U.S. Treasury Notes: 45%.

  • 1 to 5 year U.S. Treasury Bonds: 2.5%.

  • 1-5 year inflation-indexed U.S. Treasury bonds (TIPS): 2.5%

  • 0-1 year corporate notes with an A- or higher credit rating: 30%

  • 1-3 year corporate bonds with an A- or higher credit rating: 5%

  • 1-5 year sovereign, supranational and agency bonds (SSA) with an A- or higher credit rating: 5%

  • U.S. agency Mortgage-Backed Securities (MBS): 10%