Optimizing a portfolio of liquid and illiquid assets

John M. Mulvey, Woo Chang Kim, Changle Lin

Research output: Chapter in Book/Report/Conference proceedingChapter

2 Scopus citations

Abstract

Current market conditions pose new challenges for institutional investors. Traditional asset and liability models are struggling to meet investors’ needs due to poor performance of equity and bond markets. The move of portfolio allocation to alternative assets is evident. As a result, illiquidity issues and rebalancing difficulty arise. We propose some new tactics of commodity futures to enhance the performance of portfolio return as well as solving illiquidity issues. Hidden Markov Model and multistage stochastic optimization are used to systematically optimize portfolio over a set of assets.

Original languageEnglish (US)
Title of host publicationInternational Series in Operations Research and Management Science
PublisherSpringer New York LLC
Pages151-175
Number of pages25
DOIs
StatePublished - 2017

Publication series

NameInternational Series in Operations Research and Management Science
Volume245
ISSN (Print)0884-8289

All Science Journal Classification (ASJC) codes

  • Software
  • Computer Science Applications
  • Strategy and Management
  • Management Science and Operations Research
  • Applied Mathematics

Keywords

  • Asset liability model
  • Commodity futures
  • Hidden Markov Model
  • Illiquidity
  • Multi-stage optimization

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