Abstracts:

Financial Services Review
Volume 6 Number 3, 1997

Incorporating Historical Investment Performance in Projecting Life Insurance Cash Values
(pp. 155-167) DOWNLOAD FULL-TEXT ARTICLE
S. Travis Pritchett

ABSTRACT
The projection of current investment experience in life insurance sales illustrations during the historically high interest rate environment of the 1980's in the U.S. has led to consumer dissatisfaction and lawsuits against life insurers and agents. As interest rates fell after 1985, insurers were unable to credit returns near the maximums illustrated earlier. New regulations still allow projections at essentially the latest current investment returns, along with showing guaranteed and intermediate values. The question raised in this article is: Can history help the financial planner determine a range of credible investment return assumptions for determining cash values? Conclusions are based on the results of basing projections on historical investment experience.

Performance Persistence in Money Market Fund Returns
(pp. 169-183) DOWNLOAD FULL-TEXT ARTICLE
Dale L. Domian, William Reichenstein

ABSTRACT
We study the factors affecting the cross section of net returns of money market mutual funds from 1990 through 1994, and the persistence of relative returns across years. We find that the expense ratio is the most important factor in explaining differences in net returns. Government-only funds produce slightly lower returns than other-taxable funds, and economies of scale are evident only for the smaller funds. Money funds' relative returns show strong persistence. Most funds maintain stanle expense ratios, so low-cost funds produce consistently high relative returns.

Market Knowledge in Managed Municipal Bond Portfolios
(pp. 185-196) DOWNLOAD FULL-TEXT ARTICLE
Sandeep Singh, William H. Dresnack

ABSTRACT
In this paper, we analyze the investment performance of two types of open-end municipal bond mutual funds: first, mutual funds that have the objective of generating income free from federal income taxes; second, funds that have the objective of generating income free from not only federal but also a particular state's income taxes. Our results suggest the following: first, municipal bond funds monthly returns either mirror or lag the Lehman Brothers Municipal Bond Index returns on a risk-adjusted basis; second, when state taxes are significant, such as in California and New York, the investor benefits from investing in state-specific municipal bond funds.

The Challenges and Opportunities of Student-Managed Investment Funds at Metropolitan Universities
(pp. 197-200) DOWNLOAD FULL-TEXT ARTICLE
Douglas R. Kahl

Asset Allocation and Investment Horizon
(pp. 201-219) DOWNLOAD FULL-TEXT ARTICLE
Keith V. Smith