A sound investment category for pension funds that can be easily valued is

Open-ended mutual funds are considered a sound and easily valued investment for pension funds. Their value is determined by the Net Asset Value (NAV), which is calculated daily based on the closing market prices of the underlying securities in the portfolio. This daily, publicly available pricing provides a transparent, objective, and straightforward valuation method. This ease of valuation is critical for pension funds, which have stringent financial reporting requirements and fiduciary responsibilities that demand accurate and timely assessment of their holdings. The diversified nature of mutual funds also aligns with the prudent investment strategies typically employed by pension plans.

B. reverse repurchase agreements: These are primarily short-term financing or cash management tools, not a core long-term investment category for pension fund growth.

C. derivative instruments: The valuation of derivatives (e.g., options, swaps) is often complex, relying on sophisticated mathematical models and assumptions, making them not "easily valued."

D. internal investment pools: These lack a readily available, external market price. Their valuation is an internal process dependent on the underlying assets, which can be opaque and complex.

1. Governmental Accounting Standards Board (GASB). (2015). Statement No. 72 of the Governmental Accounting Standards Board: Fair Value Measurement and Application.

Reference: Paragraphs 69-71. This standard allows for investments in certain entities that calculate a net asset value (NAV) per share, such as open-end mutual funds, to be measured at that NAV as a practical expedient to fair value. This codifies the simplicity and acceptability of using NAV for valuation.

2. Bodie, Z., & Merton, R. C. (2002). International Pension Swaps. Journal of Pension Economics & Finance, 1(1), 77-83.

Reference: Page 78. The paper discusses pension fund assets and liabilities. While focused on swaps, it implicitly contrasts them with traditional, liquid assets like publicly traded funds whose market values are "readily observable," highlighting the valuation challenge of more complex instruments compared to standard fund structures.

3. Anson, M. J. P. (2009). The Handbook of Alternative Assets. John Wiley & Sons.

Reference: Chapter 1, "The Case for Alternative Assets." This source, while discussing alternatives, contrasts them with traditional investments like mutual funds. It notes that traditional assets have the benefit of "daily pricing and liquidity," which underscores why they are considered easily valued in contrast to more complex or illiquid investment categories.