Consider a state pension fund that needs to generate a series of fixed payments for its retirees Yet, assume that its compensation for its 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 investmen...

If portfolio managers are compensated based on the return ...

Consider a state pension fund that needs to generate a series of fixed payments for its retirees.

Question:

Consider a state pension fund that needs to generate a series of fixed payments for its retirees. Yet, assume that its compensation for its 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.
Portfolio
A portfolio is a grouping of financial assets such as stocks, bonds, commodities, currencies and cash equivalents, as well as their fund counterparts, including mutual, exchange-traded and closed funds. A portfolio can also consist of non-publicly...