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Link Between Pension Trustee Composition And State Bond Ratings: Study

The composition of a pension system’s board of trustees is associated with that state’s bond rating, according to a working paper published by three researchers from Troy University and Rhodes College.

Specifically, elected board members are typically associated with lower bond ratings, while appointed and ex oficio board members are associated with higher state bond ratings.

Higher bond ratings imply better fiscal health — and better pension system management.

The paper explains:

Using data on state public pension systems and bond ratings for each state from each of the three major bond ratings agencies between 2001 and 2014, we find a positive relationship between outside board members and bond ratings. Having more outside members on a state pension board of trustees results in lower bond ratings and thus higher borrowing costs for the state. More specifically, we find that a 1 percent increase in the number of elected members on a pension system’s board of trustees decreases the state’s borrowing costs between $6.84 and $19.04 per $1 million in debt at a 5% interest rate.

[…]

These findings suggest that at least in the eyes of bond rating agencies, board composition does in fact matter due to spillover effects on a state’s fiscal health. Boards made up of inside members positively contribute to a state’s fiscal health. Importantly, this suggests that principal-agent problems may not be as particularly problematic as some research has suggested. Further, this may also be indicative of the prevalence of financial illiteracy that elected board members have been found to be associated with. Inside members may have stronger financial backgrounds, which does tend to be the case for both appointed and ex – officio members and appears to provide positive benefits

According to the researchers, pension systems with a board composed of a supermajority of insiders are linked to more economically and statistically sound results.

Study Challenges Assertion That Performance-Based Fees Lead to Disproportionate Risk-Taking in Israel Pension Industry

With a recent paper, four researchers from Hebrew University in Israel are challenging the assertion of many regulators around the world that performance-based fees encourage dangerous risk-taking.

The crux of the researchers’ argument is that high levels of investment in alternative assets like private equity – seen by many observers as posing liquidity risk and providing insufficient risk premiums – aren’t as risky as commonly believed when taking into account other measures of risk, like return volatility.

It’s an interesting thesis, although it does fly in the face of other research.

From the paper:

While most regulators worldwide take the view that profit-based fees are risky and should be prohibited in pension fund management, our results cast doubt on the validity of this view: funds with performance-based fees are associated with more risk-taking in comparison with AUM-based funds only if risk is measured in terms of investment in illiquid and presumably risky “alternative assets.”

Comparisons based on other measures of risk, such as return volatility, are not highly consistent with the regulatory view. By contrast, funds with performance-based fees are clearly associated with high-quality investment management. Stated differently, even if funds with performance-based fees can be regarded as riskier than other funds, there seems to be a tradeoff whereby this higher risk is accompanied also by better investment management. We also find, within the limitations of our sample, that incentives (profit based fees) seem to be more effective than competition in inducing in inducing high-quality fund management; competition however, leads to lower fees for investors.

The researchers also recommended a revamp of current regulatory policies to better manage risk-taking by fund managers, as well as relax the restrictions on performance-based fees. Instead, they can turn to other measures including imposing fiduciary limits on specific types of risky investments. They, however, clarify that these recommendations should be adopted only as they apply.

Can Other Pensions Learn From the Retirement Systems of Alabama?

What can other pension systems learn from the Retirement Systems of Alabama?

Two researchers from Troy University conducted a case study on the Retirement Systems of Alabama, exploring the factors that led to the system’s under-funding, which may be representative of issues found in other state pension systems.

There are three main components to the case study: the evaluation of the health and performance of the RSA according to its asset growth and actuarial accounting; an analysis of the factors that led to the decline of the health and performance of the system primarily through increased risk exposure; and potential policy options for reform.

The research is too sprawling to be summarized here; read the paper yourself here.

A brief summary, according to the researchers:

The Retirement Systems of Alabama (RSA) is an appropriate and representative public pension system for a case study on public pensions for three reasons. First, in terms of the RSA’s funded health, as measured by its funded ratio, the RSA ranks in the middle of the pack among the 50 U.S. states (The Pew Charitable Trusts 2015). Second, despite making its annual required contribution each year, the RSA’s funded ratio has fallen in the state rankings from 20th in 2003 to 30th in 2013. This makes it a particularly interesting public pension system to analyze (The Pew Charitable Trusts 2015). Finally, the RSA’s funding status as a percentage of tax revenue ranks it as the 5th worst in the nation (Novy-Marx and Rauh 2009, 198). This means, that, despite ranking in the middle of the pack in terms of funded health, that the RSA will likely require major reforms before many other states.

[…]

We argue that the RSA has avoided fundamental reform through the use of misleading and inappropriate accounting and riskier investments. Reforms leading to greater transparency, the curtailment of in-state investments, and, most beneficially, transitioning new public employees to a defined contribution system with individual retirement accounts, is necessary to improve the funded health of the RSA.

As a representative public pension system, these lessons and reforms from our case study on the RSA are generalizable to other state and local public pension systems and can help corroborate and inform future investigations.

The Estopped Fiduciary: When May Participants Rely on Incorrect Calculations?

Carol Buckmann is an attorney who has practiced in the employee benefits field for over 30 years. This post was originally published at Pensions & Benefits Law.

Mistakes happen. Even in the best-run plans, occasional errors in estimating and calculating benefits are inevitable and sometimes they are caught only years after payments commenced. Fiduciaries are required to follow plan terms, so improper payments are typically cut off. Plans may also seek to recoup past overpayments once the mistake is discovered.

In the Mistaken Fiduciary, I described a situation in which Gabriel, a retiree who had never qualified for benefits at all, sued a plan to prevent it from cutting off his benefits. His suit claimed fiduciary breach and sought to estop the plan from applying its terms to him. The retiree also sought other forms of relief for fiduciary breach.

Gabriel lost his estoppel claim at the district court level, and this result was subsequently affirmed by the U.S. Court of Appeals for the Ninth Circuit. The Ninth Circuit decision clearly states that estoppel is not available where relief, as in Gabriel’s case, would contradict the written plan provisions. However, we have just had another decision in Michigan in which a retiree named Paul successfully sued to estop a plan from correcting pension overpayments. Why did Paul succeed and should plan fiduciaries be worried about this decision?

When is a Fiduciary Estopped from Correcting Overpayments?

It seems to require special circumstances, including harm to the retiree from relying on the incorrect calculation, and not just an honest mistake.

When is a Mistake Equivalent to Fraud?

In Paul, the plaintiff began work as a temporary employee and switched from union to non-union positions at the company. He and his wife met with company representatives prior to his retirement and received a pension calculation statement which overstated his benefit service. The retiree was told that the Company reserved the right to correct errors and that he would be notified if final benefit calculations changed the pension amount. The retiree asked the company representative several times to confirm that the service shown on the statement was correct, and was assured that it was. Notice of the error was not sent until two and one half years after retirement, when it was discovered by the sponsor on self-audit.

The court found that Paul was not just the victim of an honest mistake, but that the Company representatives’s gross negligence in not investigating the answer to Paul’s questions amounted to constructive fraud. Paul claimed that he would not have retired when he did had he known the correct amount of his pension. The court further found that Paul was unaware of the mistake, since he could not calculate his own benefit. The bottom line was that Paul could not be required to repay past overpayments and the plan was estopped from reducing his future payments.

What Can Plans Still Do?

Despite the fact that they didn’t help the plan’s case against Paul, use of clear disclaimers is still a good practice. Regular self-audits should still permit plan sponsors to correct typical honest mistakes. And this whole lawsuit could have been avoided if the elements of Paul’s calculation had been carefully checked when he asked about his service.

Sometimes fiduciaries raise the concern that they are stuck between “a rock and a hard place” if they don’t recoup overpayments, because in addition to worrying about equitable remedies such as estoppel, they may have caused a plan qualification error by not following plan terms. There may also be some relief for this concern: the IRS has just “clarified” its position on correcting defined benefit plan overpayments to permit more leeway. It appears that pension plan sponsors will not always have to request a return of overpayments if they are willing to make up the loss to the plan.

IRS has requested comments on what else it should do about correcting overpayments. The U.S. Supreme Court has also accepted a case to determine whether overpayments of disability benefits need to be tracked in order to be recoverable. That future decision may impact other ERISA plans as well. The law in this area is still in flux, so fiduciaries should stay tuned for further developments.

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Practical Issues in Pension Fund Investing – Execution of Subscription Agreements

Louise Greig is an attorney who has practiced in the pensions & benefits field for over 15 years, most recently as a partner at Osler, Hoskin & Harcourt LLP. This post was originally published at Pensions & Benefits Law.

There is a famous phrase which is particularly apt in the area of pension fund investing – “the devil is in the details”. This is the first in a series on practical issues that arise in connection with investments by Canadian pension funds in alternative asset classes. The subject of this post is the execution of subscription agreements.

It is becoming common now for pension funds in Canada to invest in pooled funds. Such investments can take different forms. For example, a pooled fund may be structured as a limited partnership or a trust. Whatever the structure, the investor is typically required to complete and sign a “subscription agreement”. An issue that frequently comes up is: what entity should execute the subscription agreement?

You might ask: why does it matter who signs the subscription agreement? Isn’t this just a technicality? It is probably correct that nothing will turn on who signs — as long as everything is going well. But what happens if the investment fails and/or the plan becomes insolvent? In those scenarios the last thing anyone needs is a dispute over who is on the hook for payments under the agreement. Even if the dispute is ultimately resolved in favour of the party who is properly liable under the agreement, time and money will have been wasted over an issue which could have been addressed up front.

Many subscription agreements make the “pension plan” or ”pension fund” the signatory. This assumes that the pension fund is a “person” capable of entering into a legal agreement. In some jurisdictions, a “pension plan” is deemed by law to be a separate legal person. In those jurisdictions, the pension plan or pension fund may be the proper person to enter into the subscription agreement. But this is not the law in Canada. In Canada, a pension plan or pension fund does not have the status of a separate legal person and therefore cannot legally enter into a subscription agreement.

So who is the proper person to enter into the agreement? The answer depends on a range of factors, including the nature of the plan, the terms of the plan’s funding documents, any internal delegations of authority and the form of subscription agreement. What is important to remember is that, under pension legislation, the investment of the plan assets is a “plan administrator” function, not an “employer” function. This means that if the employer is also the legal plan administrator (which is the norm for private sector plans in most Canadian common law jurisdictions), it must be made clear that the employer is signing the subscription agreement in its capacity as the plan administrator, not in its personal capacity.

Another issue which needs to be kept in mind when completing a subscription agreement arises from the interaction between pension law and securities law. Generally, a subscription agreement requires the pension plan to confirm that it is an “accredited investor” under applicable securities legislation. It is important to review the documentation carefully to make sure it is clear that the “accredited investor” is the pension fund, since the person signing on behalf of the plan may not qualify as an “accredited investor”. This may require modifications to the wording of the subscription agreement.

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Survey Sheds Light On Barriers To Cross-Border Investing

What obstacles do institutional investors face when making cross-border investments? And what strategies do they use to overcome those obstacles?

A survey was recently conducted to find out, and the results have been published in the Rotman International Journal of Pension Management.

The survey asked respondents to identify and rate the biggest obstacles to cross-border investment:

We first asked respondents to rate, using a five-point Likert- type scale (1 = strongly disagree, 5 = strongly agree), to what extent 20 different issues identified in the investment obstacles literature would “decrease the likelihood your fund will invest in another country.”

[…]

The top two issues, as identified by summing the percentages of “agree” and “strongly agree” responses, were “financial regulation uncertainty” (FP, 80%) and “unfavorable comments by government officials in recipient country” (IC, 73%). While the latter is an IC factor, it focuses on the nation-state and the use of informal suasion by officials, and thus is related to FP factors. Following these items almost two-thirds (64%) of the funds agreed or strongly agreed that “unfavorable tax treatment of your fund type” (FP) and “non-transparent investment review policies” (FP) would reduce the possibility of their fund’s investing in another country. Of these four factors, “financial regulation uncertainty” (FP) and “non-transparent investment review policies” (FP) elicited the highest proportion of “strongly agree” rankings.

The survey also asked respondents to identify the strategies they used to address the barriers:

Respondents were asked to indicate whether or not they used eight specific strategies to address the 20 possible barriers: increase transparency; co-invest; use external managers; restrict voting rights; accept outside investors; use debt; other strategies; and no strategy. Respondents could select all applicable strategies used to address each issue. The strategy identified most often (124 times) to address all three factor classifications was “no strategy,” followed by “external managers” (68) and “increase transparency” (55). Rounding out the top five were “co-investing” (34) and “other strategies” (30). The fact that “other strategies” was selected least often suggests that the survey included the most commonly used strategies.

Finally, the survey asked respondents to rank ten long-term investing objectives. The aggregate results:

The article, authored by Rachel Harvey, Patrick Bolton, Laurence Wilse-Samson, Li An, and Frédéric Samama, can be read in full here.

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Are Pensions More Important To Retirement Security Than Data Shows?

Alan L. Gustman, Thomas L. Steinmeier and Nahid Tabatabai have authored a paper exploring the possibility that the importance of pensions, and the financial support they provide retirees, is understated in retirement income data.

The paper, titled “Mismeasurement of Pensions Before and After Retirement”, was published in the Journal of Pension Economics and Finance.

From the paper:

There are a number of reasons why the value of pensions after retirement may be underestimated, especially if evaluation is based on sources of income realized in retirement. First, not all pensions are in pay status, even after the person leaves the pension job. When a pension is not in pay status, it is commonly ignored in questions related to pension incomes. Even when a pension is in pay status, a survey may not include income from the pension. For example, as pointed out by Anguelov, Iams and Purcell (2012), CPS data on pension incomes in retirement count only annuitized income, but not irregular income from pensions, such as periodic withdrawals from 401k accounts. This is an important problem because funds in DC pension accounts often are not claimed until the covered worker reaches age 70, when withdrawals are mandated. Indeed, a disproportionate amount of benefits may not be withdrawn until even later.

The paper provides further reason that survey data may not accurately portray pension benefits received by retirees:

Another factor is that actual benefit payments may be reduced from the pension called for by the simple benefit formula advertised by the firm when an annuity is chosen that differs from the single life annuity emphasized by plan. For example, the annuitized benefit will be reduced when, as required by law, a spouse or survivor benefit is chosen. The reduction will depend on the ages of each spouse and on whether the survivor benefit is half the main benefit, whether it is two thirds as in Social Security, or whether the annual benefit will remain unchanged upon the death of the covered worker. There may be further reductions if the retiree chooses a guaranteed minimum payout period.

To be sure, these differences in payout due to actuarial adjustments do not create actual differences in the present value of benefits. But one must know the details of the respondent’s choice as to spouse and survivor benefits and other characteristics of the annuity, and adjust using appropriate life tables. That is, a proper analysis would not just consider the annual pension payment, but would also consider the value of payments that will be made in future years to the surviving spouse. Typically these details are not available on a survey and no such adjustment is made.

The paper delves much deeper into this issue – read the full paper here.

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An Optimist’s View of Long-Termism In Institutional Investing

Investments & Pensions Europe released a survey today indicating that three of every four pension funds consider themselves long term investors. But they disagreed on the specifics of long-termism.

In light of the survey, here’s an article by Theresa Whitmarsh, Executive Director of the Washington State Investment Board, discussing how pension funds can move away from short-termism and improve the dialogue surrounding true long-term investing.

The article was published in the Fall 2014 issue of the Rotman International Journal of Pension Management.

Whitmarsh writes:

While solutions to short-termism proposed for institutional investors vary, they coalesce around three themes: first, disintermediation through direct ownership of private assets; second, concentrated holdings of publicly traded securities with commensurate influence over corporate behavior; and, third, collaboration with other investors to influence market behavior. All three models are being tested and successfully implemented, but not at scale.

There are several sound reasons for this. Disintermediation is not always practical for a globally diversified portfolio. Skilled intermediaries who possess asset class, style, sector, and geography expertise will always be in demand (and, unfortunately, even unskilled ones will remain in demand). And holding a concentrated portfolio of public companies runs counter to what we know about active investing: it is very difficult for an active investor to outperform broad market indexes, and index investing remains an efficient and cost-effective way for institutional investors to put large amounts of money to work. Finally, as mentioned earlier, market and governance reform has fallen short of our goals as investors, despite strong governance-focused collaborations. Intermediaries outnumber us, outspend us on lobbying, and are more financially motivated than us to maintain the short-termist status quo.

So while the benefits of long-termism can be many – harvesting an illiquidity risk premium, providing ballast to the capital markets, and encouraging corporations to invest in innovations that sustain their enterprises and society over time – neither investors nor corporations have a particularly strong record.

However, I am becoming more optimistic that a movement for long-termism is afoot, one that is pulling in corporations and intermediaries and that has the potential to get enough traction to change behavior. This movement comes from deep within the corporate sector and is increasingly supported by important market players. It goes by various names – sustainable capitalism, fiduciary capitalism, inclusive capitalism, conscience capitalism – but no matter the moniker, the goal of all these undertakings is to encourage a brand of capitalism that prices in externalities, broadly benefits society, and ultimately sustains the planet. An initiative co-sponsored by the Canada Pension Plan Investment Board and McKinsey, Focusing Capital on the Long Term,1 involves broad participation from investors, money managers, corporations, and finance academics and will be producing several recommendations on how to take these concepts from idea to practice.

Whitmarsh on the three catalysts that she believes will spur long-term investing:

I see three catalysts for the increasing dialog on the benefits of long-termism – the first two self-serving of the market, though not without benefit to society, and the third essential to our survival as a species.

The first catalyst is the need to restore trust in the capitalist system. Trust was one of the main casualties of the Great Recession, according to Christine Lagarde, Managing Director of the International Monetary Fund, who spoke at the Conference on Inclusive Capitalism in London on May 27, 2014.2 Lagarde noted that in a recent poll conducted by the Edelman Trust Barometer, less than one-fifth of those surveyed said they believe that business or government leaders will tell the truth about important issues. This should be a wake-up call, she told her audience; trust is the lifeblood of the modern business economy. The way to restore trust, according to Lagarde, is to ensure that growth is more inclusive, favoring the many, not just the few. She shared a startling statistic: the richest 85 people in the world hold more wealth than the poorest 3.5 billion.

This leads us to the second catalyst: increasing recognition of the negative effect of rising income inequality, in both developed and emerging markets, on the pace of growth. The most unlikely signal that this issue has gone mainstream came in early August, when Standard & Poor’s (2014) published a report that correlates the rise of income inequality in the United States with dampening GDP growth.

The last catalyst is the threat of carbon-emission-induced climate change. Market economies do not price in externalities well, but carbon emissions have to count as potentially the most costly externality ever encountered. (To my mind, only nuclear weapons production comes close.) Even the most self-serving capitalist wants a world in which to keep making money.

Perhaps, with capitalism in crisis, trust in the finance sector at an all-time low, and growing concerns about what we are doing to our planet, we just may – as a society, and collectively as investors – be willing to act.

We have reason to be optimistic that we will act, according to economist Larry Summers. Speaking at the same event as Lagarde, he noted, “This idea that capitalism is about to fail is one we have seen before, and yet it has been a triumph of the capitalist system that it has proven remarkably resilient; that it has given rise to what might be called self- denying prophecies, prophesies of doom that lead to adjustments that lead to repair.”

The entire piece can be read here.

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Principles For Better Pension Design

A long, insightful discussion and analysis of pension design was published in the Fall issue of the Rotman International Journal of Pension Management. During the course of the paper the three authors, Thomas van Galen, Theo Kocken, and Stefan Lundbergh, propose a set of principles to help navigate the dilemmas and trade-offs posed by both public and private pension systems.

The paper begins:

Designing a pension system is a complex business in which difficult tradeoffs must be made. On the one hand, we may want everyone to receive a retirement income that is linked to their own contribution; on the other, we want to protect people from poverty. How do we weight these two goals? The choice will depend on societal preferences and cultural values. We must also ask for whom we should design the pension system: what is ideal for a self-employed high-income earner may be far from adequate for someone living on a minimum wage, paying rent, and raising a family of five.

Addressing these dilemmas is a daunting task, especially with the recognition that pension systems all have their own historical background, and that each has evolved in its own particular context.

The authors propose a set of pension design principles, organized into three groups: behavioral principles, stability principles and risk-sharing principles.

The behavioral principles:

1. Keep it simple. Don’t make the pension solution any more complex than necessary. Complexity and lack of transparency make decision making more difficult, increasing the risk that people will make decision they will later regret. Simplicity, by contrast, helps manage people’s expectations and increases their trust, both vital qualities for a successful pension system.

2. Provide sensible choices. Employees should be given a standard package, on top of which a limited set of well- considered alternatives are offered, to protect them from making mistakes while allowing them individual freedom (Boon and Nijboer 2012). Creating a set of choices for a pension system is like drawing up a good restaurant menu: it offers people tools (the menu) for tailoring the solution (the meal) to their needs, but without expecting them to be financial experts (the chef) (Thaler and Benartzi 2004).

3. Under-promise, over-deliver. Research has shown that people experience twice as much pain from a loss as pleasure from a gain of equal size. Therefore, it is wise to avoid delivering outcomes below people’s expectations, which implies that a pension system should offer people a minimum level of pension income that, in practice, will likely be exceeded (Tversky and Kahneman 1992). Research shows that people value some kind of certainty very highly and are willing to pay substantial sums of money for it (Van Els et al. 2004), but too much certainty will make the pension design unaffordable.

The stability principles:

1. Ensure adaptability. Constantly changing external conditions require an adaptable pension system. Explicit individual ownership rights ensure flexibility, so that the system can adjust itself over time, and also make pensions more mobile to move to other systems.

2. Keep it objective. The health of a pension system should be measured based on objective market valuations. An objective diagnosis ensures that beneficiaries feel comfortable with how the pension fund deals with their property rights. If the valuations are calculated differently from market practice, participants may feel they are better off outside the system.

3. Prepare for extreme weather. The world is uncertain and unpredictable things happen; a pension system should be robust under extreme circumstances, built not on predictions but on consequences of possible outcomes. To assess the system’s robustness, draw up a set of “extreme weather” scenarios for risks outside and inside the pension system. The design of the pension system should target the ability to endure these extreme scenarios.

And the risk-sharing principles:

1. Avoid winner/loser outcomes. To avoid losing support, pension system design should prevent any one group of participants benefitting at the cost of another group. For example, if internal pricing in DB plans deviates from market pricing, it is likely to create winner/loser outcomes, eventually leading to pension system distrust.

2. Only diversifiable risks should be shared. A system founded on solidarity in bearing diversifiable risk creates value for all by reducing individual risk. For example, we have no idea how long we will live after we retire, but we can estimate the current average life expectancy of a homogenous group reasonably well, so it makes sense for individuals to pool their individual longevity risk with a large group.

3. Individuals must bear some risks. Risks that cannot be diversified or hedged in the market should be borne by the individual. Pooling non-diversifiable risks leads inevitably to transfers between groups in the collective pool and will eventually erode trust in the system. In reaching for higher long-term returns, younger people can absorb more market risk than older people; this calls not for risk sharing but for age differentiation in exposure to financial markets.

The authors go on to provide examples of these principles in action, using pension systems from the UK, Sweden and the Netherlands. The full seven page paper can be read here.

The Role of Merit in the Career of a Mutual Fund Manager

Mutual fund managers hold in their hands the retirement income of millions of people. So it should be of great interest to retirees, and those approaching retirement, whether mutual fund managers are qualified for the job.

A recent study examined 2,846 managers of actively managed mutual to try and answer the question: what is the role of merit in the careers of mutual fund managers?

From the study, which was published in the Financial Analysts Journal:

The results provide evidence of the role of merit in the careers of managers of actively managed funds. Consistent with prior studies, we found that relative performance is an important determinant of career success as a mutual fund manager. We showed that managers who underperform on a style-adjusted basis are at greater risk of losing their jobs.

However, the evidence on the role of superior performance is less strong. Surviving managers of all tenures, even those who lasted 10 or more years, outperformed those with shorter tenures, but we also showed that they did not consistently outperform the market on a risk-adjusted basis or their style benchmark. Data on style-adjusted monthly returns show that solo managers with 10 or more years of tenure outperformed about as often as they underperformed.

When performance is calculated using Carhart or Jensen alphas, even solo managers with tenure of more than 10 years show no ability to beat the market on a risk-adjusted basis. The key to a long career in the mutual fund industry seems to be related more to avoiding underperformance than to achieving superior performance.

The study suggests that, for mutual fund managers, long careers don’t come as a result of consistently outperforming markets, but rather as a result of avoiding under-performance. From the study:

The lack of significantly better performance over time by long-tenure managers suggests that longevity is related to the avoidance of underperformance. Additional factors may be at work in impairing the performance of these managers. For example, researchers have found evidence that some underperforming managers at smaller funds are able to retain their positions despite their performance.

Additionally, other research has shown that a significant proportion of the best mutual fund managers earned their reputations with high rates of return early in their careers and had performance that was significantly worse later on. Whether this early performance was due to luck or early superior skills that atrophied later is subject to conjecture and further research.

The study, authored by Gary E. Porter and Jack W. Trifts, was published in the July/August issue of the Financial Analysts Journal. The entire paper and analysis can be read here.

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