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Authors

Alec Sauchik

Abstract

This Note first presents the socioeconomic theory underlying the concept of ETIs and outlines the scope of trustees' fiduciary obligations to plan participants when making investments in residential real estate. It also analyzes relevant case law pertaining to fiduciary duties of pension fund trustees. Next, it compares two conflicting views on the legality of economically targeted investments. Finally, it argues that although the legal framework applicable to the fiduciary obligations of pension fund trustees is inadequate to fully address all challenges to the legality of ETIs, pension fund investments in low-to-moderate income residential real estate can be reconciled with the duties of plan fiduciaries to plan participants and their beneficiaries. It examines several potential strategies aimed at popularizing targeted pension investments in low and moderate income residential real estate. This Note concludes that targeted investments in low and moderate income residential real estate are a valid social objective that pension funds can and should cautiously pursue.

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