Consider a state pension fund that needs to generate a series of fixed payments for its retirees. Assume that the compensation of the fund’s portfolio
Consider a state pension fund that needs to generate a series of fixed payments for its retirees. Assume that the compensation of the fund’s portfolio managers is tied to the return earned on the investments each year. Write a short essay that explains how the compensation plan might lead to investment strategies that do not serve the needs of the retirees.