| Abstract: | This paper extends the risk-return argument of modern portfolio theory to the institutional typologies with which state-sponsored local government investment pools (LGIPs) operate. By using fixed-effects regression on monthly panel data from 18 LGIPs across seven years, the author found that institutional typologies with which LGIPs operate matter. An LGIP should be structured and managed based on its ability to mitigate risks. The paper contributes to increasing the accountability and fiscal governance over public money and promotes public funds investment laws in the US, UK and internationally. |
