Stochastic Dominance Analysis of CTA Funds

In this paper, we employ the stochastic dominance approach to rank the performance of commodity trading advisors (CTA) funds. An advantage of this approach is that it alleviates the problems that can arise if CTA returns are not normally distributed by utilizing the entire returns distribution. We find both first-order and higher-order stochastic dominance relationships amongst the CTA funds and conclude that investors would be better off investing in the first-order dominant funds to maximize their expected utilities and expected wealth. However, for higher-order dominant CTA, riskaverse investors can maximize their expected utilities but not their expected wealth. We conclude that the stochastic dominance approach is more appropriate compared with traditional approaches as a filter in the CTA selection process given that a meaningful economic interpretation of the results is possible as the entire return distribution is utilized when returns are non-normal

Overcoming Inertia: Do Automated Saving and Investing Strategies Work?

Many workers do not take advantage of savings opportunities provided to them at their workplace, nor do they always make wise investment decisions regarding employer plans. Various automated strategies have been implemented by employers with the objective of increasing retirement plan participation and, hence, the financial security of workers. Automatic strategies work by proactively arranging some type of action (e.g., plan enrollment) to occur unless people specifically opt out. This article examines and synthesizes previous empirical research about five automatic savings and investing strategies: (a) automatic retirement savings plan enrollment, (b) automatic contribution increases, (c) automatic portfolio rebalancing, (d) automatic rollovers, and (e) automatic investment plans. Advantages and disadvantages of each strategy are discussed, along with implications for financial educators. Copyright Springer Science+Business Media, LLC 2007Automatic investing, Automatic retirement plan enrollment, 401(k) plans,