1. Topic:
"Theoretical Foundations of Medium-Term Investing and the Possibility of Its Application by Institutional Investors".
2. Relevance of the Research.
Institutional investors in Russia rely exclusively on long-term investing strategies, as no scientific principles, core provisions, or methodology for medium-term investing have been developed to date. The average annual return under long-term investing is 10–15%, whereas medium-term investing would yield 20–30%. Deploying medium-term instruments would act as a powerful catalyst for investment business development in the economy.
3. Research Objectives.
Study the frequency of transactions under given parameters in medium-term vs. long-term investing and compare the results.
Justify instrument-selection principles for a medium-term portfolio (60–80 instruments) vs. a long-term portfolio (10–30 instruments).
Compare risks in medium-term and long-term investing and their impact on overall returns.
Develop capital protection principles for medium-term investing that could eliminate loss-making operations.
4. Expected Outcomes.
Economic Impact of Medium-Term Investing by Institutional Investors in the Russian Economy
Russia ranks 6th globally and 2nd in Europe by GDP (PPP), estimated at USD 4.097 trillion for 2020 (IMF). By nominal GDP (USD 1.7 trillion in 2020), Russia ranks 11th globally and 5th in Europe [GDP (current US$). World Bank (14.04.2020)].
Financial activity accounts for 4.4% of GDP — approximately USD 180 billion.
The share of institutional investors in the Russian economy (OECD): insurance organisations — 2.87%, fund and bank management companies — 2.6%, non-state pension funds — 6.1%; total 11.57%. Financial assets total USD 474 billion, generating average annual profit of USD 60 billion — one-third of Russia's entire financial sector output.
At a 1:1 ratio the economic effect would be USD 30 billion (0.73% of GDP); full substitution would yield USD 60 billion (1.46% of GDP).