29-C.ppt

388 views

Published on

0 Comments
0 Likes
Statistics
Notes
  • Be the first to comment

  • Be the first to like this

No Downloads
Views
Total views
388
On SlideShare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
8
Comments
0
Likes
0
Embeds 0
No embeds

No notes for slide

29-C.ppt

  1. 1. Don’t Kill the Golden Goose Conference of Consulting Actuaries 2006 Conference Annual Meeting October 24, 2006 Westin Mission Hills Resort Rancho Mirage, California M. Barton Waring Chief Investment Officer for Investment Policy & Strategy, Emeritus 415-597-2064 [email_address]
  2. 2. The pension funding crisis <ul><li>Defined benefit pension plans are in danger </li></ul><ul><ul><li>United Kingdom, Australian experience </li></ul></ul><ul><ul><li>CIEBA survey of US corporate DB plans: mark-to-market makes them risky! </li></ul></ul><ul><li>The perception is that pension funding risks and costs are unmanageable </li></ul><ul><ul><li>Today’s investment policy practices aren’t effective at controlling pension funding risk </li></ul></ul><ul><ul><li>Today’s active management policy practices are inefficient </li></ul></ul><ul><ul><li>Today’s contribution practices can be improved </li></ul></ul><ul><ul><li>Today’s pension costs seem too high too high to be sustainable </li></ul></ul><ul><li>But the perception is not correct: We do have the tools to fix DB plan problems </li></ul><ul><li>If we want to save defined benefit plans, we have to be “on a mission” to adopt and use these new tools </li></ul>
  3. 3. DC plans aren’t the answer <ul><ul><li>Flexible, yes </li></ul></ul><ul><ul><li>Transportable, yes </li></ul></ul><ul><li>But they seldom if ever grow large balances </li></ul><ul><ul><li>A couple of hundred thousand dollars won’t support much of lifestyle in retirement ($44,000 median balance!) </li></ul></ul><ul><ul><li>Only a small augmentation of social security </li></ul></ul><ul><ul><li>But they are fully funded! (Or are they?) </li></ul></ul><ul><li>DC plans aren’t really retirement plans </li></ul><ul><li>Your goose may already be cooked! </li></ul>
  4. 4. DB plans have many advantages: Golden Geese <ul><li>A big advantage: Higher (implicit) savings rate </li></ul><ul><li>Professional management and state of the art risk control (policy asset allocation) </li></ul><ul><li>Lower fees and costs (wholesale versus retail) </li></ul><ul><li>More skillful manager selection, in many cases </li></ul><ul><li>Higher average returns (2%–4% per year ) </li></ul><ul><li>Another big advantage--the insurance principle: </li></ul><ul><ul><li>Spread mortality risk across a large group </li></ul></ul><ul><ul><li>Allows all to have lifetime protection at reduced cost </li></ul></ul><ul><ul><li>Personal example: For DC, I need to fund for 105 year possible life. In DB, I only need 88 years. </li></ul></ul><ul><ul><li>A male age 65 retiree needs only 65% as much savings in a DB plan as in an unannuitized DC plan, for the same monthly draw </li></ul></ul><ul><li>DB plans are successful in replacing some realistic part of income on retirement; DC plans generally are not (as used today in the US) </li></ul>
  5. 5. What is the investment objective for DB pensions? for developing investment policy <ul><ul><li>Many investment objectives are stated today </li></ul></ul><ul><ul><li>Asset-only? </li></ul></ul><ul><ul><li>Asset-only, followed by monte carlo simulation of the accounting? </li></ul></ul><ul><ul><li>Focus on risk/return relationship of contributions, or of pension expense, or of A/L ratio? </li></ul></ul><ul><ul><li>Minimize present value of future contributions, or of future normal cost? </li></ul></ul><ul><ul><li>Or . . . . ? </li></ul></ul>
  6. 6. The utility function is specified in financial economics “ The goal of asset allocation analysis should be stated in terms of surplus. The objective is to maximize the risk-adjusted future value of the surplus.” - from Asset Allocation by William F. Sharpe, Nobel Laureate in Economic Science
  7. 7. A solution: controlling pension funding risk <ul><li>Surplus optimization </li></ul><ul><ul><li>Surplus efficient frontier </li></ul></ul><ul><ul><li>Definitions, and Two Fund Theorem explanation </li></ul></ul><ul><ul><li>Economic views of the liability </li></ul></ul><ul><li>The “three decisions” for controlling pension funding risk: A case study </li></ul><ul><ul><li>A practical application of pension funding risk control </li></ul></ul><ul><ul><li>Mark-to-market: Problem, or benefit? </li></ul></ul><ul><ul><li>Transparency turns out to be the key to progress </li></ul></ul><ul><ul><li>You can’t hedge a book value liability! </li></ul></ul>
  8. 8. The portfolio of interest is the assets less the liabilities – the surplus or deficit Pension Plan “T-Account” Contributions Expense (corporate) A/L ratio Deficit (Surplus) [=PVFC] Assets Liability (economic measure) If we control the economic surplus risk, we also control all the accounting risks Surplus optimization simultaneously satisfies all conventional objectives
  9. 9. The new toolkit for managing pension funding risk <ul><li>Surplus optimization: A “two-fund theorem” problem </li></ul><ul><ul><li>1) The Liability-Matching Asset, or “Hedging Portfolio :” Duration matching controls the interest rate mismatch between the assets and the liabilities, 1 or “surplus duration” </li></ul></ul><ul><ul><ul><li>Duration is a measure of how a financial asset or liability changes in value when interest rates change </li></ul></ul></ul><ul><ul><ul><li>Pension surpluses have dual durations : Inflation sensitivity and real interest rate sensitivity </li></ul></ul></ul><ul><ul><ul><li>Think of these net surplus durations as just “factor betas” for explaining surplus changes with rate changes </li></ul></ul></ul><ul><ul><li>2) The “Risky Asset Portfolio :” Controlling “surplus beta,” the net market risk exposure of the assets relative to the liabilities 2 </li></ul></ul><ul><ul><ul><li>Market risk is rewarded, but it is risky! </li></ul></ul></ul><ul><ul><ul><li>How much market risk do you want to take? </li></ul></ul></ul><ul><li>Adding alpha through active management: Manager structure optimization manages your active managers, tactical positioning, hedge funds, etc. 3,4 </li></ul><ul><ul><li>Rewarded if skillful! </li></ul></ul>See Waring, et al, Journal of Portfolio Management, Summer 2004 1 , Fall 2004 2 , Spring 2000 3 , Spring 2003 4
  10. 10. An economic view of the liability is essential for doing surplus optimization <ul><ul><li>Conventional actuarial view of the liability is expressed as if it were in dollars, but it’s a different kind of dollar! </li></ul></ul><ul><ul><li>Determined with wrong discount rate, with smoothing. “Sasquatches,” </li></ul></ul><ul><ul><li>The bottom line: dollars and sasquatches are different units </li></ul></ul><ul><ul><li>Unlike dollars, sasquatches can’t be plotted on the same graph as things that happen in actual, real dollars of value </li></ul></ul><ul><li>An economic measure of the liability, by construction, is in genuine dollars, not in sasquatches </li></ul><ul><ul><li>So its returns and risks can be used in surplus optimization, making surplus optimization “doable” </li></ul></ul><ul><ul><li>You’re still a non-believer in market discount rates? Set up a laddered portfolio of coupons and bonds to pay off the liability: It will require an amount = $EL </li></ul></ul><ul><ul><li>FWIW, there is universal agreement among actual financial economists that the government bond curve provides the right discount rates for fully funded plans </li></ul></ul>
  11. 11. Pension expense volatility can be controlled I f you control investment risk to the surplus, you control expense risk <ul><ul><li>Using surplus optimization (the “two fund” version) together with economic accounting, we can confirm that if we control investment risk we control expense risk: </li></ul></ul>If the liability is matched and all interest rate risks are hedged with a Hedging Portfolio , there is no investment risk except that taken intentionally in the Risky Asset Portfolio Pension expense (level and volatility) are then reduced to just that of normal cost, supplemental cost, and the risky excess return of the Risky Asset Portfolio – exposure to the latter being in your complete control. Pension expense risk can be dramatically reduced! Supplemental costs do have some risks, but these might be managed to some degree with better actuarial tables and continuous improvement of decrements. They can’t be eliminated.
  12. 12. Contribution volatility can be controlled I f you control investment risk to the surplus, you control contribution risk <ul><ul><li>Economic views of the contribution are similar to those for expense, but we add in any starting deficit (surplus): </li></ul></ul>Pension expense risk can be dramatically reduced! Economically, the required contribution is simply the shortfall of the assets against the economic measure of the liability, at period end (time 1). In turn, this is just the shortfall at time 0, adjusted by normal and service costs, interest costs, and asset returns, i.e., by pension expense . This is all identical to the contribution calculation, other than for the inclusion of the starting economic deficit. The only “risky” terms, again, str supplemental cost and the risky asset portfolio. And so again, investment policy can control nearly all risks!
  13. 13. What is surplus optimization? First, look at asset-only optimization Expected risk Expected return Asset-only frontier A stylized view: Cash Bonds Large Cap Equity International Equity Small Cap Equity
  14. 14. What is surplus optimization? Add in a liability-matching portfolio (beta factors only), decide risk level Surplus Frontier Expected risk Expected return Liability The Hedging Portfolio Asset only frontier How much surplus beta risk? Surplus beta decision: The Risky Asset Portfolio
  15. 15. What is surplus optimization? Consider alpha from active management Expected risk Expected return How much surplus beta risk? Liability Active risk Expected alpha Active frontier … and how much alpha risk? Active risk decision
  16. 16. Section Summary: Managing DB pension funding risks Using surplus optimization and the economic liability <ul><li>Three key investment policy decisions are always presented: </li></ul><ul><ul><li>Extending portfolio duration (the liability match, or Hedging Portfolio) </li></ul></ul><ul><ul><li>Reconsidering the stock-bond mix and its risk/return tradeoff (the Risky Asset Portfolio) </li></ul></ul><ul><ul><li>Using active management (beating the zero sum game?) </li></ul></ul>
  17. 17. Controlling pension costs What is really happening “Under the hood” of conventional accounting <ul><ul><li>There is an economic “pension budget identity” that reveals that contributions and periodic normal costs have present values equal to that of the liability ( ab initio ): </li></ul></ul><ul><ul><li>A plan’s periodic normal cost is controlled solely by the total present value of the benefit level, not by the accounting ! </li></ul></ul><ul><ul><li>To control costs, control the benefit level </li></ul></ul><ul><ul><li>And to control the benefit level, both management and labor need good valuations, transparency </li></ul></ul>How could it be any different?
  18. 18. A case study Asset-only optimization is the usual tool <ul><li>Current holdings appear “efficient” in asset-only space </li></ul>Expected asset return Expected asset risk 0% 1% 2% 3% 4% 5% 6% 7% 8% 9% 10% 11% 12% 0% 5% 10% 15% 20% 25% 30% Alternatives TIPS [D=9] Cash Domestic Equity International Equity Nominal Bonds [D=5] Current Policy
  19. 19. Today’s Hedging Portfolio: The assets aren’t well matched to the liabilities! Asset Class Durations Real duration Inflation duration Composition Duration $ Dur.(m) Duration $ Dur.(m) Equity and Equity-like 75.0% 8.00 $820 0.00 $0 Nominal bonds (5.25 year nominal duration) 22.5% 5.25 $161 5.25 $161 TIPS (9 year real duration) 2.5% 9.00 $31 0.00 $0 Aggregate Plan Assets 100% 7.41 $1,012 1.18 $161 Liability Durations Valuation Real duration Inflation duration Weight Duration $ Dur.(m) Duration $ Dur.(m) 1) Retired/Inactive 55.2% 12.87 $926 12.67 $912 2) Current employees 44.8% 22.89 $1,335 8.41 $490 Aggregate Plan 100% 17.36 $2,261 10.76 $1,402
  20. 20. How much net (surplus) interest rate risk is left over? <ul><li>What this means for this plan sponsor: These surplus durations represent uncompensated risk </li></ul><ul><ul><li>For a 1% decrease in the real rate, surplus will go down by roughly 9.6%, or $1,249m </li></ul></ul><ul><ul><li>For a 1% decrease in the inflation rate, surplus will go down by roughly 9.5%, or $1,241m </li></ul></ul><ul><li>Summary: Today’s plans have large bets on both inflation rate increases and real rate increases </li></ul>Surplus calculations based on using the market-valued benefit security A/L of 105%. Real duration Inflation duration Duration $ Dur. (m) Duration $ Dur. (m) Liability 17.36 $2,261 10.76 $1,402 Assets 7.41 $1,012 1.18 $161 Surplus duration (9.58) ($1,249) (9.52) ($1,241)
  21. 21. Asset model We use BGI assumptions for this analysis. Assumptions can be modified to incorporate the companies expectations, however for modest changes the results will be materially similar. * Represents the company’s existing nominal bond portfolio with a nominal duration extension to 45 years. ** Represents the company’s existing TIPS portfolio with a real duration extension to 45 years. Arithmetic Asset class Expected return (%) Expected risk (%) Domestic Equity 8.75 15.50 International Equity 8.75 16.25 Bonds (5 dur) 4.75 6.00 Bonds (15 dur) 5.35 14.00 Bonds (45 dur)* 7.15 38.00 TIPS (9 dur) 4.50 6.00 TIPS (15 dur) 4.86 9.30 TIPS (45 dur)** 6.66 25.80 Alternatives 11.20 30.00 Cash 3.25 1.50 Dom Eq Int’l Eq Bonds TIPS Alts Cash Domestic Equity 1.00 International Equity 0.65 1.00 Bonds 0.20 0.15 1.00 TIPS 0.28 0.20 0.70 1.00 Alternatives 0.65 0.40 0.20 0.28 1.00 Cash 0.00 0.00 0.00 0.00 0.00 1.00
  22. 22. Detail: The surplu s efficient frontier In “surplus graphical space” Expected surplus return Expected surplus risk 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 0% 1% 3% 5% 7% 9% 11% 13% 15% Case 1 (Minimum surplus risk, 4% Equity) Case 5 (75% Equity) Case 4 (60% Equity) Case 3 (45% Equity) Case 2 (30% Equity) Current Policy More complete hedging of liability Less complete hedging of liability
  23. 23. Optimal mixes from the surplus efficient frontier The ratio of domestic equity to international equity to alternatives is constrained to be in a 50 : 15 : 10 ratio, consistent with current policy. Surplus optimal mixes Asset class: Current Policy Case1 Case 2 Case 3 Case 4 Case 5 Equity-Like 75.0% 4.3% 30.0% 45.0% 60.0% 75.0 Domestic Equity 50.0% 3.3% 20.0% 30.0% 40.0% 50.0% International Equity 15.0% 1.0% 6.0% 9.0% 12.0% 15.0% Alternatives 10.0% 0.0% 4.0% 6.0% 8.0% 10.0% Bonds 25.0% 95.7% 70.0% 55.0% 40.0% 25.0% Nominal Bonds 22.5% 60.6% 50.8% 43.6% 34.9% 24.3% Duration 5.25 16.9 20.2 23.5 29.3 42.1 TIPS 2.5% 35.2% 19.3% 11.4% 5.1% 0.7% Duration 9.00 16.9 20.2 23.5 29.3 42.1 Expected surplus return 2.76% 0.20% 1.36% 2.02% 2.68% 3.32% Expected surplus risk 13.24% 0.08% 3.86% 6.09% 8.32% 10.55% Duration mismatch Real -9.58 0 (Matched) 0 (Matched) 0 (Matched) 0 (Matched) 0 (Matched) Inflation -9.52 0 (Matched) 0 (Matched) 0 (Matched) 0 (Matched) 0 (Matched) Asset-only return 7.99% 5.43% 6.59% 7.25% 7.91% 8.55% Asset-only risk 12.07% 12.40% 12.95% 13.73% 14.78% 16.06%
  24. 24. The impact of funding ratio on the surplus frontier Constrained and unconstrained 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% Surplus Standard Deviation Surplus Return A/L= 100% A/L = 75% A/L = 50% Unconstrained Constrained 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% -2.5% -2.0% -1.5% -1.0% -0.5%
  25. 25. Asset return distributions: a reminder Left: Asset “tulip,” minimum surplus variance portfolio (mostly fixed income, asset beta .405) Right: Asset “tulip,” 100% equity portfolio (asset beta 1.44) $100 $1,000 $10,000 0 5 10 15 20 Years 0 5 10 15 20 Years $100 $1,000 $10,000 Seeking higher returns (steeper slope) means accepting a wider distribution of ending wealth 95% 75% Mean Median 25% 5%
  26. 26. Current policy: 75% Equity-like asset classes Funded ratio (A/L) distributions, over time Current holdings modestly improve the expected funded ratio over time but imply an unattractive downside scenario This and all other forecasts are focused exclusively on financial risk/return tradeoffs and exclude the impact of future cash flows and all other unhedgeable risks such as mortality risk and other experience risks. Expected funding ratio (A/L) 260% 176% 134% 102% 69% 95% 75% 50% 25% 5% Time (years) 50% 100% 150% 200% 250% 0 2 4 6 8 10 105%
  27. 27. Current policy: 75% Equity-like asset classes An equivalent picture, but showing impact in dollars of surplus space Expected dollars of surplus ($b) Time (years) $25.6b $13.4b $6.8b $0.6b -$9.6b Investments paying for the plan Investments causing higher contributions 30 20 10 0 -10 $0.3b 95% 75% 50% 25% 5%
  28. 28. Improving investment policy Impact of extending duration to hold a proper Hedging Porfolio <ul><li>Extending the dual durations of the bond portfolio improves the expected surplus returns and reduces the expected volatility of the surplus </li></ul><ul><ul><li>Expected surplus return = 3.32% </li></ul></ul><ul><ul><li>Expected surplus risk = 10.55% </li></ul></ul>Expected surplus return Expected surplus risk 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% Case 1 (Minimum surplus risk, 4% Equity) Case 5 (75% Equity) Case 4 (60% Equity) Case 3 (45% Equity) Case 2 (30% Equity) Current Policy 0% 1% 3% 5% 7% 9% 11% 13% 15%
  29. 29. Impact of extending duration Funded ratio (A/L) distributions over time 95% 75% 50% 25% 5% Time (years) Expected funding ratio (A/L) 224% 166% 135% 110% 82% 260% 176% 134% 102% 69% (Current policy in background) 0 2 4 6 8 10 50% 100% 150% 200% 250% 105%
  30. 30. Improving investment policy Impact of reducing stock-bond mix to 60/40, in addition to extending duration <ul><li>Reducing the stock-bond mix to 60/40 (from 75/25) reduces the volatility of surplus but has minimal impact on the surplus return </li></ul><ul><ul><li>Expected surplus return = 2.68% </li></ul></ul><ul><ul><li>Expected surplus risk = 8.32% </li></ul></ul>Expected surplus return Expected surplus risk 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% Case 1 (Minimum surplus risk, 4% Equity) Case 5 (75% Equity) Case 4 (60% Equity) Case 3 (45% Equity) Case 2 (30% Equity) Current Policy 0% 1% 3% 5% 7% 9% 11% 13% 15%
  31. 31. Impact of extending duration, changing stock-bond mix Improved funded ratio (A/L) distributions over time 95% 75% 50% 25% 5% Time (years) Expected funding ratio (A/L) 193% 152% 129% 110% 87% 260% 176% 134% 102% 69% 250 200 150 100 50 105% (Current policy in background) 0 2 4 6 8 10
  32. 32. Improving investment policy Impact of all changes (extending duration, reducing stock-bond mix, and incorporating active management) Expected surplus return Expected surplus risk Case 1(Minimum surplus risk, 4% Equity) Case 4 (60% Equity) Case 3 (45% Equity) Case 2 (30% Equity) Current Policy 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 4.5% 5.0% Case 4A (60% Equity, including alpha) <ul><li>A 1% expected alpha overlay (with 1% expected active risk) on the entire plan improves expected surplus return with only a small change in surplus risk </li></ul><ul><ul><li>Expected surplus return = 3.68% </li></ul></ul><ul><ul><li>Expected surplus risk = 8.38% </li></ul></ul>Case 4 (60% Equity) Case 5 (75% Equity) 0% 1% 3% 5% 7% 9% 11% 13% 15%
  33. 33. Impact of adding active management Funded ratio (A/L) distributions over time 50% 75% 100% 125% 150% 175% 200% 225% This and all other forecasts are focused exclusively on financial risk/return tradeoffs and exclude the impact of of future cash flows and all other unhedgeable risks such as mortality risk and other experience risks. Expected funding ratio (A/L) 193% 152% 142% 120% 95% 212% 167% 129% 110% 87% Time (years) 0 2 4 6 8 10 105% 95% 75% 50% 25% 5% (Case 4 in background)
  34. 34. Impact of all changes (extending duration, reducing stock-bond mix, and incorporating active management) Funded ratio (A/L) distributions over time 95% 75% 50% 25% 5% (Current policy in background) Time (years) 0 2 4 6 8 10 Expected funding ratio (A/L) 50% 100% 150% 200% 250% 212% 167% 142% 120% 95% 260% 176% 134% 102% 69% 105% This and all other forecasts are focused exclusively on financial risk/return tradeoffs and exclude the impact of of future cash flows and all other unhedgeable risks such as mortality risk and other experience risks.
  35. 35. How much tolerance for investment risk? The integrated corporate balance sheet Corporate “T-Account” S/H Equity Operating assets Debt . Pension assets Pension Liability If the pension assets are a large part of the total assets, beta risk from the risky asset exposure will have a large effect on S/H equity beta risk So, bad investment experience in the plan may compound an otherwise bad period for the company The weighted avg. beta of the assets = weighted avg. beta of the liabilities
  36. 36. Risk Tolerance: How much equity? What does bad investment experience mean to you? <ul><li>To hold more equity increases the expected or average return, but it also increases the cumulative probability of very bad returns over long periods of time </li></ul><ul><ul><li>Equivalently, contributions and expense can be expected on average to be smaller , but the probability that they will be larger does go up </li></ul></ul><ul><ul><li>Can you afford greater contributions, expense when markets are generally depressed? </li></ul></ul><ul><li>Enterprise view: </li></ul><ul><ul><li>Today’s 75% equity allocations are probably going to come down </li></ul></ul>
  37. 37. Exceeding the limits of the possible: Do you feel lucky with your aggressive investment policy? <ul><li>Too much pressure is placed on the possibility of getting extraordinary, high returns, in order to solve funding problems </li></ul><ul><li>But “feeling lucky” is a poor substitute for fair expectations, risk control </li></ul>
  38. 38. Conclusions: Don’t kill the golden goose! <ul><li>Prescription: Use core teachings from modern portfolio theory to control true pension funding risks and costs </li></ul><ul><li>Pension funding risks are manageable, with 3 tools: </li></ul><ul><ul><li>The Risky Asset Portfolio : Surplus efficient frontiers help manage equity, or market, risks </li></ul></ul><ul><ul><li>The Hedging Portfolio: Dual duration management techniques manage both types of interest rate risks (real interest rate, and inflation) </li></ul></ul><ul><ul><li>Active management , skillfully employed, can significantly improve surplus performance </li></ul></ul><ul><li>Costs can be managed if benefit levels are negotiated using economic measures of the liability </li></ul><ul><ul><li>If costs are controlled, then contributions and expense are also controlled </li></ul></ul><ul><li>DC plans are not a good substitute! </li></ul>
  39. 39. Biography <ul><li>M. BARTON WARING Managing Director Chief Investment Officer for Investment Policy & Strategy, Emeritus </li></ul><ul><li>Barton Waring ran BGI’s Client Advisory Group from 1996 until his recent decision to retire. His research and published articles on investment policy and strategy issues have significantly contributed to the ability of today’s investors to control their risks and enhance their returns, in both beta and alpha dimensions. While most of his client work has been for BGI’s “strategic” clients, the largest of the world’s institutional investors (defined benefit retirement plans, foundations, endowments, social security systems, and central banks), it was also often directed at the needs of individuals in their personal and defined contribution retirement plan accounts. He has published over two dozen articles on surplus asset allocation, manager structure optimization and risk budgeting, as well as many on defined contribution/individual investor investment strategy. Four of these articles have won “outstanding article” awards from their respective journals, and these and many others are widely cited as setting the bar for today’s standards of practice. He serves on the Editorial Advisory Boards for the Journal of Portfolio Management, the Financial Analysts Journal, and the Journal of Investing. </li></ul><ul><li>His background prior to BGI also dealt intensively with classical investment strategy and policy issues. He was the manager of the specialist investment strategy consulting firm Ibbotson Associates, co-leader of Towers Perrin’s asset-liability practice and the head of its Central and Western regional asset consulting practices. He started and led the original defined contribution business for Morgan Stanley Asset Management in 1992, implementing the lifestyle fund concepts that he pioneered in 1989 and which he has written about frequently. Barton received his BS degree in economics from the University of Oregon, his JD degree from Lewis and Clark, with honors, and his masters degree in finance from Yale University. </li></ul>

×