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Shaping up the company’s internal investment fund through separation portfolios


  • Rodolfo Apreda


This research paper sets forth that an alternative for managing the internal investment fund of any company, lies on separation portfolios. Firstly, the company’s internal investment portfolio is built up within the context of the incremental cash-flow model. Next, separation portfolios are introduced and consequential features for this paper are predicated upon them: firstly, they provide an easier framework for risk-management; secondly, their risk-return profile bring about a down-to-earth performance benchmark. Afterwards, the internal investment portfolio is mapped out like a distinctive separation portfolio. Lastly, pragmatic consequences and some corporate governance advantages of this financial engineering will follow.

Suggested Citation

  • Rodolfo Apreda, 2010. "Shaping up the company’s internal investment fund through separation portfolios," CEMA Working Papers: Serie Documentos de Trabajo. 416, Universidad del CEMA.
  • Handle: RePEc:cem:doctra:416

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    References listed on IDEAS

    1. J. Tobin, 1958. "Liquidity Preference as Behavior Towards Risk," Review of Economic Studies, Oxford University Press, vol. 25(2), pages 65-86.
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    More about this item


    separation portfolios; portfolio management; incremental cash-flow model; corporate governance; internal investment fund; risk metrics;

    JEL classification:

    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions
    • G34 - Financial Economics - - Corporate Finance and Governance - - - Mergers; Acquisitions; Restructuring; Corporate Governance
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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