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From the editor

Retirement planning is becoming increasingly important as the baby boomers approach
the age when they are eligible to retire and must deal with the consequences of their prior
investment decisions. Three of the six articles in this issue deal with various aspects of
pension plans and ratios to be used in planning activities.

Kevin W. SigRist and Stewart L. Brown explore the issues involved in designing a state
retirement plan in Florida for their article entitled, “Design Considerations for Large Public
Sector Defined Contribution Plans”. They identify the major types of public retirement plans,
issues that face the trustees who oversee the implementation of a plan, legal issues, model
legislation for these types of plans, the administrative and advisory costs of the plans, and the
tradeoff involved in institutional accounts versus mutual funds. This article is of particular
interest to all of those individuals who expect a pension from a state entity as well as those
who are responsible for designing these plans.

Many educators invest at least some of their retirement funds in TIAA/CREF funds that
are available through 403(b) plans. Edward M. Miller and Larry J. Prather examine the
possibility of predictable patterns in TIAA/CREF funds that allow for an opportunity to use
a trading rule that they devise that will beat a buy and hold approach. Their work is
interesting in light of the announcement by CREF that restricts the number of trades that can
be made by participants.

Specific ratios that financial planners can use in helping their clients to plan for retirement
are provided in a study by Sue Alexander Greninger, Vickie L. Hampton, Karrol A. Kitt, and
Susan Jacquet. They report on a survey that seeks consensus on appropriate assumptions to
use in retirement savings projections and specific steps to be taken as the individual nears
retirement age.

Bond funds are frequently recommend for those nearing retirement as an alternative to
stocks. James Philpot, Douglas Hearth, and James Rimbey examine the performance of
managers of bond funds in an article entitled, “Performance Persistence and Management
Skill in Non-Conventional Bond Mutual Funds”. They find that managers of high-yield bond
funds are able to outperform on a short-term basis. They also provide evidence that portfolio
turnover is inversely related to risk-adjusted performance.

Individual investors are often advised to add international funds to their portfolio to reduce
their overall risk. Matthew O’Connor and Edward A. Downe explore the impact of WEBS

Financial Services Review 9 (2000) v–vi

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on closed-end country funds. They caution investors to be wary of discounts for these types
of funds.

The last article by Jeanne M. Hogarth and Jinkook Lee looks at the search pattern that
individuals follow in selecting a mortgage. This article is unique in as much as it explores
factors that are not normally study in the residential financing literature.

K. E. Lahey

vi Editorial / Financial Services Review 9 (2000) v–vi