| dc.description.abstract | Prudence investment advocates considering investment diversification so as to mitigate
inherent investment risks. This is in the premise that diversified investments can lead
into reversing adverse financial performances in entities. The general objective of this
study was to investigate the effect of investment diversification on the financial
performance of retirement benefits schemes in Kenya. The specific objectives employed
in this study comprised of an investigation on the effect of investment diversification in
equities, bonds, real estates as well as short-term government securities on the financial
performance of the retirement benefits schemes in Kenya. The study further examined
the moderating effect of the foreign exchange rate on the relationship between the
independent and the dependent variables. The modern portfolio, the liquidity
preference, the transaction cost as well as the purchasing power parity theories were
used in supporting this study. The study adopted the descriptive research design. The
population employed in this study comprised of 87 retirement benefits schemes in
Kenya. The stratified random sampling technique used in this study resulted into
having 72 units of analysis. Primary as well as secondary quantitative data were
employed in this study, and the data was collected through questionnaires and data
collection schedules. Data analysis was through the statistical package for social
sciences version 20. Pilot study was carried out so as to ascertain the validity and
reliability of the research instruments. Test for normality, test for heteroscedasticity, test
for linearity, test for outliers, test for autocorrelation, test for multicollinearity, the F-test
as well as the R Square tests were conducted on the data prior to running the multiple
linear regression model. Descriptive statistics as well as the Pearson’s correlation
coefficients were generated before running the regression model. The P-value from the
regression coefficients were employed in testing the hypothesis and decision made on
whether to reject or fail to reject the null hypothesis at 0.05 level of significance. The
hypothesis testing for the direct relationship model led to the rejection of H01, H02, H03
and H04. This meant that investment diversification in equities, bonds, short-term
government securities as well as investment diversification in real estate have a
significant positive effect on the financial performance of the retirement benefits
schemes in Kenya. The hypothesis testing for the moderated relationship model led to
the rejection of H05. The rejection of H05 meant that foreign exchange rate has a
significant inverse moderating effect on the relationship between investment
diversification and the financial performance of the retirement benefits schemes in
Kenya. The researcher therefore recommends that the retirement benefits schemes
should consider diversifying their investments because it affects their financial
performance. The researcher also recommends that the schemes should be vigilant on
the volatility of the foreign exchange rate because it has a significant inverse effect on
the relationship between investment diversification and the financial performance of the retirement benefits schemes in Kenya. | en_US |
