Another thing I want to point out, because I just noticed it. The
recent years' yields on bond funds has been slightly higher than
equity (stock) mutual funds, but with only a very small fraction of
the volatility:
http://news.morningstar.com/fundReturns/FundReturns.html?category=$FOCA$HY
I'm not sure what the current thinking among fiduciaries is on
diversified high grade bond funds is, but the statistical distribution
of those long-term returns looks as if a variety of them for a portion
of the reserves would have a far better risk-to-return ratio than
sticking with certificates of deposit and treasury securities (which
currently pay negative real interest rates, i.e., less than inflation)
as we have been.