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These questions are for guidance only, to help you focus on certain aspects of a particular case.  Put yourself in the position of the Decision-Maker.  The real issue is what should be done to resolve the situation?  Your decision should be the logical product of a thorough Analysis and Discussion. These questions are for guidance only, to help you focus on certain aspects of a particular case.  Put yourself in the position of the Decision-Maker.  The real issue is what should be done to resolve the situation?  Your decision should be the logical product of a thorough Analysis and Discussion. These questions are for guidance only, to help you focus on certain aspects of a particular case.  Put yourself in the position of the Decision-Maker.  The real issue is what should be done to resolve the situation?  Your decision should be the logical product of a thorough Analysis and Discussion. These questions are for guidance only, to help you focus on certain aspects of a particular case.  Put yourself in the position of the Decision-Maker.  The real issue is what should be done to resolve the situation?  Your decision should be the logical product of a thorough Analysis and Discussion. These questions are for guidance only, to help you focus on certain aspects of a particular case.  Put yourself in the position of the Decision-Maker.  The real issue is what should be done to resolve the situation?  Your decision should be the logical product of a thorough Analysis and Discussion. The questions under questions for consideration are for guidance to focus on certain aspect of the case, but the case analysis should be written in case analysis format, not Q&A format. Most importantly, the main part of the case is the final decision, and the conclusion as to what should be done to resolve the situation in the case. The decision should be the logical product of a thorough Analysis and discussion.

Tanmoy · Accepted Answer

Case 6: “Timber!” Ontario Teachers’ Pension Plan Board Considers an Alternative Investment Class
Introduction
Inflation hedge is a type of investment which helps the investors to protect them from the declined purchasing power of the currency. This decline in the currency value may be due to rise in the price due to inflation or other macro-economic factors. Thus, it a process to offset the probable drops in the price of the currency.
Timberland investments are called inflation-hedge investment due to the reason that it helps the investors to diversify the portfolio of fixed income and equity products. Timberland deals with timbers which are grown in millions of acres of timberland in United States. These timbers and lands are financed by pension funds of the individuals, donations from the charitable trusts, investment by individual investors and funding from the universities. Therefore, it provides the investors through various investment vehicles which have various stakes in timberland (CHRIS B. MURPHY, 2021).
It is Ontario Teachers’ Pension Plan Board (OTPPB) which will now decide whether to invest in the timberland investment. OTPPB already have investments in equities at 65%, fixed income securities at 20% and various other alternatives at 15% rate. Later, there were some changes made by OTPPB in the ratio of the investment. The current altered investment ratios were in the rate of equities 60%, fixed income securities 18% and 22% in other alternative investments. The other alternative investments made by OTPPB were in the inflation hedge securities in Real return Bonds (RRB). This 22% also consisted of investment in commodity based derivative contracts and real estates. Now, there are few clauses for OTPPB that there must be $8.9 billion of asset liability surplus and must achieve a return of 4.5% over the customary rate of inflation.    
Analysis
There are three investments which are differentiated as per the customer’s risk profile which is OTPPB in this case (Julia Kagan, 2020).
	Asset Class
	Target Allocation
	Equity Investments
	57%
	Fixed Income Securities (Debentures)
	18%
	Inflation-Hedge Investment
	25%
	Total Investment
	100%
Further the equities were segregated in the ratio of 80% investments in public companies and 20% investment equity based derivative contracts. On the other hand, in fixed income securities there will be 70% that will be invested in government bonds and the remaining 30% in debentures which carries fixed rate of interests in some of the Fortune 100 companies in United States. Finally, in inflation hedged investment there will be approximately 7% investment in Real Return Bonds (RRB); 4% in the commodity based derivative contracts; 7% investment in the real estate sectors and further 7% in Timberland initially. If timberland provides a higher return then the percentage of investment to be made by OTPPB in Timberland securities will increase to generate higher returns.

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