@ravivooda @marc @ajfinance @Sophie Both @vincentt and I are trying to ascertain whether foundation/trust and endowment is the only institutional portfolio that requires adding inflation. Please let us know your thoughts on this. Many thanks!!!

@ajfinance do we need to take into consideration inflation for DB plans? Or is the required return = discount rate used to calculate liabilities only?

A CFA Level 3 Discussion About IPS - Inflation Rate And Required Return

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This topic has 4 replies, 2 voices, and was last updated Oct-174:26 am by Alta12.

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- Alta12
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  16 Oct 2017 at 11:46 pm
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  @ravivooda @marc @ajfinance @Sophie‌
  
  Both @vincentt and I are trying to ascertain whether foundation/trust and endowment is the only institutional portfolio that requires adding inflation.
  
  Please let us know your thoughts on this. Many thanks!!!
- AjFinance
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  17 Oct 2017 at 3:10 am
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  @Alta12 Usually when an institution is supposed to provide perpetual support, you compound the return components.
  
  But I don’t think it’ll make a difference during grading, if the question is ambiguous as to the type of calculation to be used. Both will give you identical answers.
- Alta12
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  17 Oct 2017 at 3:21 am
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  @ajfinance do we need to take into consideration inflation for DB plans? Or is the required return = discount rate used to calculate liabilities only?
- AjFinance
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  17 Oct 2017 at 3:23 am
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  @Alta12 I think for DB plans, the discount rate already considers inflation.
- Alta12
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  17 Oct 2017 at 4:26 am
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  @ajfinance thanks! 🙂
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