tailieunhanh - Investment Intermediaries in Economic Development: Linking Public Pension Funds to Urban Revitalization

One significant obstacle pension funds face is a history of failed economically targeted investments (ETIs) from the 1980s that have resulted in negative perceptions of investments in the underserved markets. In part, many of those failed investments were driven by an overly aggressive effort to achieve the social benefits first, and the market rates of return came second. To make matters worse, critics argue that ETI investments are prone to political interfer- ence (Romano 1993) and can distract pension funds from their mission. They argue that these investments are politically motivated and can be referred to as “Politically Targeted Invest- ments—PTIs,” in. | Community Development INVESTMENT REVIEW 45 Investment Intermediaries in Economic Development Linking Public Pension Funds to Urban Revitalization Lisa A. Hagerman Gordon L. Clark and Tessa Hebb University of Oxford School of Geography at the Centre for the Environment Harvard Law School Pensions Capital Stewardship Project Labor and Worklife Program Investing in America s inner cities is an innovative practice in which large institutional investors such as public pension funds can enjoy financial and social returns while spurring economic growth in underserved emerging domestic markets EDMs .1 These investments are made through traditional assets fixed income and alternative assets equity real estate and private equity . Contrary to market perception targeted investments can produce competitive risk-adjusted returns along with secondary social benefits such as jobs workforce housing and an increased tax base. Pension funds with targeted investment policies have been explicit and public about their desire to find investment opportunities in the underserved markets. Hebb 2005 highlights the California Public Employees Retirement System s CalPERS targeted investment policy language referring to the California Emerging Market Investments in which underserved markets would include urban and rural areas undergoing or in need of revitalization where there are assets . an available labor pool underused infrastructure conducive to business development CalPERS 2005 . New York City Employees Retirement System s NYCERS economically targeted investment policy adopted 1982 and MassPRIM s policy adopted 2003 include both a geographic target and a requirement to fill a capital gap that reaches an underserved market NYCERS 2005 MassPRIM 2006 . As interested and motivated as the pension funds may be it is difficult for a large investor to make investments in EDMs. To start large capital investors such as pension funds must make very large investments. The investments in .

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