There is a relationship between the type of trustee on the board and the riskiness of a pension fund’s investments, according to research that supports the idea that governance and board composition matter.

In particular, there is a relationship between the riskiness of a US public pension fund’s assets and the proportion of trustees on the board who are political appointees and worker representatives elected by member schemes.

Under the rules of the Government Accounting Standards Board, US public pension funds are allowed to discount their liabilities by the expected return on their assets. This is a perverse incentive to invest in more risky assets, according to work by Rob Bauer, academic director of the International Centre for Pension Management, along with Martijn Cremers and Aleksander Andonov.

Their paper, “Pension fund asset allocation and liability discount rates”, compares public and private pension funds in the US, Canada and Europe, and finds that US public pension funds do act on their regulatory incentives.

Bauer, who is a professor of finance at Maastricht University, says the regulatory link between the liability discount rate and the expected return gives US public plans an incentive to increase their allocation to risky assets.

In particular, these funds have an incentive to increase the allocation to risky assets when expected returns decline, and Bauer contends that board composition, and especially stakeholder representation, will be a driver of the funds’ response to these incentives.

The research also shows that funds with a higher representation of state and participant-elected trustees respond more to the regulators’ incentives (and perform worse).

“Our empirical results show that funds with a higher percentage of board members from these categories take more risk, use higher discount rates and perform poorly,” Bauer says.

So the research has shown not only that US public pension funds have become the biggest risk-taking pension funds around the globe, but also that the increased risk-taking by US public funds has a negative correlation with their performance.

US public pension funds, on average, underperform their strategic benchmarks by about 55 basis points per year, the research shows.

This means the regulatory framework matters and, moreover, the pension fund board composition matters in a profound way, too.

Bauer is also the executive director of the International Centre for Pension Management, which runs a board effectiveness program (BEP) that he programs as academic director of BEP, which is a joint initiative between Rotman and ICPM. The week-long course is held twice a year, and the next event (April 3-7) will mark its 10th iteration.

Board composition and dynamics are discussed during the program, which instils best practice in key areas such as organisational mission, fiduciary duties, investment styles, the role of the board versus management, risk management, and human resources management, including compensation.

In essence, it focuses on the higher level responsibilities of board members to provide oversight of what is essentially a complex financial institution.

Over the years, more than 250 trustees from 64 organisations and 12 countries have attended the BEP. Participants consistently say meeting other trustees with different experiences and backgrounds and from different types of funds and countries is invaluable.

“What the 250-odd alumni like is we discuss real strategic issues relevant to the board of a pension fund,” Bauer explains. “It’s not about, for example, investments; it’s about not interfering with management but having the right tools to deal with management.”

 

More information about the board effectiveness program can be found here.

For many institutional investors, the short-term impact of the United Kingdom’s decision to leave the European Union was positive.

The £20.9 billion ($25.5 billion) medical charity Wellcome Trust reduced its sterling exposure to a record low ahead of the vote, in a strategy that helped the fund return 19 per cent in 2016.

The €12.3 billion ($13 billion) German pension fund Ärzteversorgung Westfalen-Lippe (ÄVWL) Brexit-proofed its portfolio with a large US dollar exposure. Dollar holdings accounted for about 12 per cent of its assets last summer, offsetting weakness from a moderate sterling exposure and making the fund a net gainer from the Brexit decision.

Nine months on and a ‘soft Brexit’ – which would give the UK continued access to the single market based on the free movement of goods, capital, services and people throughout the bloc – is unlikely. Instead, the UK is set to leave not only the single market but possibly the customs union as well.

The customs union sets a common external tariff for countries within the bloc, and leaving it would free the UK to sign trade deals with the rest of the world. The timeline is fraught with unknowns, none more important than the fact an eventual tariff deal would need to be ratified by parliaments in all 27 member states. A protracted split could encourage other members, particularly those with elections this year, to leave. With a hard Brexit in the offing, what are the long-term investor challenges and opportunities?

Selective optimism in real estate

The UK’s real-estate market is looking vulnerable, particularly London’s financial sector. The big question is whether UK-based institutions will hang onto the ability to sell their services throughout the EU, via existing ‘passporting’ rights, once Britain leaves the bloc. If they can’t, many could relocate to Europe, dragging down real-estate values in their wake.

“The area we see as most vulnerable is tenants in the financial sector. It is unclear how the new trade regulations might affect their business,” says Dale MacMaster, chief investment officer of Canada’s Alberta Investment Management Corporation, (AIMCo), the C$90.2 billion ($69.4 billion) pension fund with a $12.4 billion real-estate portfolio, of which 11.8 per cent is in the UK.

Nevertheless, AIMCo still views UK real estate “in a positive light” and MacMaster notes steady demand for office space from tech and media tenants, as well as leasing demand from industrial groups.

“We will pursue opportunities in areas such as modestly priced housing projects and logistics warehousing projects for firms supplying the UK market,” MacMaster says. “Moreover, the depreciation in sterling against the Canadian dollar is a chance to add assets.”

Other investors share his selective optimism.

PFA Asset Management chief investment officer equities and alternatives, Henrik Nøhr Poulsen says, “We believe the UK is still likely to be the most attractive real-estate market in Europe in 10 years. However, the long-term attractiveness of UK real estate will depend on how attractive a country the UK is for business in the future. We don’t know if the level of demand is going to be 90 per cent of what it is today or 120 per cent.”

PFA Asset Management is the investment arm of Denmark’s DKK550 billion ($78.2 billion) PFA Pension, where strategy is focused on building an alternatives allocation from 2 per cent to 10 per cent of assets under management over the next five years.

Others funds have a more negative outlook on UK real estate, and have been quick to shape their allocations to benefit from demand for office space in rival European financial capitals, such as Frankfurt and Paris.

Lutz Horstick, head of securities and loans at ÄVWL, says: “There is opportunity in Frankfurt’s office market from banks relocating from London to European cities. A lot of money from the Far East and Middle East headed exclusively to London but this is starting to change. We have been very sceptical of the London property market for a while.”

Ilmarinen, Finland’s third-largest pension fund, has an 11 per cent allocation to real estate and has also cooled on the UK market. Despite plans to boost investment in Europe, the fund has put investment in UK real estate on hold since Brexit.

“There are so many open questions about Brexit for investors,” Ilmarinen chief investment officer Mikko Mursula says. “We don’t know the time schedule, or what will happen in the end.”

Canada’s appetite for UK infrastructure

Canadian pension funds have poured into UK infrastructure, buying stakes in the High Speed 1 railway line that connects London to the Channel Tunnel, critical energy infrastructure and landmark London property, ports and airports – including London City Airport, in a deal closed a few months before Brexit.

Appetite at AIMCo, which has more than a quarter of its $5.2 billion infrastructure portfolio in the UK, will cool going forward. But MacMaster, who likes UK infrastructure for its links to inflation, especially as sterling weakens, doesn’t attribute this directly to Brexit, but more to the fact that the portfolio is already weighted towards the UK.

“The ongoing focus is now on Euro-denominated investments, regardless of Brexit,” he says. “One investment area we are interested in exploring longer term is new infrastructure opportunities potentially put forward to help the UK compete more effectively post-Brexit.”

Active management in equities

Investing in UK stocks post Brexit could introduce a new phase where funds embrace active management and stock picking over passive, cheaper investment vehicles.

Chief investment officer Salwa Boussoukaya-Nasr, at France’s €36.3 billion ($38.4 billion) Fonds de Réserve pour les Retraites (FRR), thinks this strategy has already paid off. Nearly 60 per cent of equity investments are actively managed at FRR, in a strategy that has helped shield the fund from enduring structural weakness in the euro zone and the Brexit fallout.

Going forward, Boussoukaya-Nasr says, active strategies will position the portfolio for new trends, particularly slower UK growth and a normalisation of valuations as euro zone earnings improve. FRR increased its exposure to the euro zone from 2012 to 2015, with its allocations to the region’s investments rising from 41 per cent to 49 per cent during that time.

ÄVWL’s Horstick says: “The fall in sterling offers a window of opportunity for investors to build exposure in UK equities.” UK companies with a global customer base and dollar earnings, say, tech companies, won’t be affected by any domestic downturn and look cheap.

AIMCo’s MacMaster says companies that could feel the fallout are those dependent on strong UK demand.

“At the moment, AIMCo tends to underweight sectors where, on average, companies derive a larger portion of their revenues from the UK,” he explains. Sectors dependent on an immigrant workforce, like farming and hotel services, and companies focused on trade with the EU also face a more uncertain future.

Uncertainty is the abiding theme of Brexit.

“The most obvious impact of Brexit is uncertainty,” says Ian Scott, head of investment strategy at the UK’s Pension Protection Fund, the £23.4 billion ($28.4 billion) lifeboat fund where post Brexit strategy included scaling back of risk in the growth portfolio.

An LDI strategy cushioned the PPF from the shock of Brexit, in contrast to many other UK funds which have been hit by gilt yields falling, pushing up their liabilities. “Because we are fully hedged the impact of Brexit on our balance sheet is mirrored by the impact on our liabilities. Brexit does mean, however, we are managing the risk on our growth portfolio differently.”

The $188.8 billion California State Teachers Retirement System (CalSTRS) will navigate Brexit uncertainty via tilts. The fund has been developing an asset allocation away from its home-country bias and towards a more global asset mix since 2015.

“CalSTRS will continue to move toward our long-term allocation policy and may take short-term tilts allowed in the allocation policy, given our market outlook,” fund spokesman Ricardo Duran says. “We continue monitoring the impact of Brexit on the European market for these tilts, and the implementation of our long-term asset allocation policy.”

For now, few funds are factoring in much lower EU growth, or further exits from the bloc; moreover, the UK’s loss is Europe’s gain. Most are unlikely to increase investment in the UK, and those that do will be highly selective and opportunistic.

“In general,” MacMaster concludes, “AIMCo believes that where there is uncertainty, there is always opportunity.”

Finally there is a robust measure of whether or not corporations that focus on the long term achieve better results. According to the McKinsey Global Institute, the answer is a resounding yes.

McKinsey has released a discussion paper, Measuring the Economic Impact of Short-termism, which analyses whether short-termism genuinely detracts from corporate performance and economic growth.

Using a data set covering 615 large- and mid-cap publicly listed US companies from 2001 to 2015, McKinsey has created a five-factor corporate horizon index.

The data looks at patterns of investment, growth, earnings quality and earnings management. It separates companies with a long-term focus from others and compares their performance.

Among the findings:

  • From 2001-14, the revenue of long-term firms cumulatively grew 47 per cent more, on average, than the revenue of other firms, with less volatility.
  • Long-term firms invested more than other firms from 2001 to 2014.
  • Long-term companies exhibited stronger financial performance over time
  • From 2001-15, long-term firms added nearly 12,000 more jobs, on average, than other firms.

The research shows that firms with a long-term focus exhibit stronger fundamentals, deliver stronger superior financial performance, continue to invest in difficult times and add more to economic output and growth.

 

To view the discussion paper, click here.

Investment strategy at the United Kingdom’s Coal Pension Trustees Services is characterised by a sizeable equity allocation and a growing portfolio of illiquid investments, including shipping assets, to generate cash flow.

CPT manages the pension pots of the British Coal Staff Superannuation Scheme (BCSSS) and the Mineworkers Pension Scheme (MPS), two defined benefit pension funds with combined assets of £20 billion ($25 billion) that are among the few lasting legacies of the UK’s once-vibrant coal mining industry.

All management is outsourced, and apart from the passive equity allocation, none of the assets are pooled. The two funds are run as separate pension schemes with separate boards of trustees. Nevertheless, they are bound by a shared strategy developed over the past five years by CPT chief investment officer Stefan Dunatov, for whom a primary task is aligning trustee objectives with investment strategy.

“My job is to give impartial advice to the trustees on investment strategy and implementation – including manager search and selection – and ensure the asset allocations are geared towards achieving the two schemes’ objectives,” Dunatov says.

Over the last year, CPT has boosted its exposure to illiquid assets, including private debt, special situations debt, shipping and property, in a growing allocation funded primarily from cash and equity sales. It’s a strategy Dunatov likes for the high cash flows, comparing it to holding long-term bonds. Along with private equity, each scheme now has between one-third and one-half of its assets designated for illiquid investments.

The private-debt allocation, grown from zero when Dunatov arrived to about 10 per cent of assets in both schemes, comprises direct secured loans to businesses based in the UK, Europe and the US. The return-seeking strategy deliberately targets riskier corporate debt, often below investment grade, in mandates outsourced to four managers, including Goldman Sachs, Sankaty Advisors and Apollo Global Management.

“We make it quite clear what risk we are prepared to take but we are not involved in actual company calls,” Dunatov explains. “However, we can veto or stop investments anytime we like. In private debt, we do rule out managers that are not prepared to put skin in. The more we have our interests aligned with our managers, the more comfortable we are with the mandate.”

A 6 per cent target allocation to special situations debt is held through limited partnerships via a combination of segregated and pooled funds. Here, the underlying investments are principally loans made to corporations of all sizes in Europe and the US, capitalising on opportunities in niche segments of the debt and credit markets, including distressed debt.

‘Floating property’

Also in the illiquid bucket is a target 1.5 per cent allocation to shipping assets, comprising about 20 tankers that bring “high” income, but are also more of a “deep value buy”. This allocation was also introduced under Dunatov’s watch. He likens it to floating property.

“You own the ship and lease it out. The credit risk is more volatile than for property, but we are compensated for this very well,” he says, declining to comment on the allocation’s latest returns. He does say slow global trade “hasn’t been a problem” for the portfolio, which is poised to gain as commodity prices pick up again. He also likes the fact the allocation fits CPT’s industrial past: one of the ships is even called Sheffield, the northern city that is home to CPT.

CPT’s real-estate investments are directly owned, mature commercial property investments, all in the UK and, again, chosen for their high income. Although the bulk is in offices and shopping centres, “a small slice” is going into residential property.

“Very little” of the portfolio is in London, Dunatov says, where prices have recently come under pressure since Brexit.

“There is nothing distressing about this portfolio; there are no alarm bells ringing,” Dunatov says.

Both BCSSS and MPS share large listed equity allocations, particularly MPS, at 51.1 per cent, versus BCSSS’s 36.7 per cent.

“We forecast our expected return for all asset classes based on various economic scenarios,” Dunatov says. “Our allocation to equity isn’t because of a love of equity. It is because it’s the best way to achieve our aims.”

That’s something CPT has been doing. Both schemes beat their benchmark for the most recent annual reporting period, posting a 2.7 per cent return. The annual return over three years is above 8 per cent.

Fewer, more meaningful, managers

The equity portfolio is divided three ways: between a passive allocation, a quantitative allocation in factor strategies, and a more traditional active allocation. Because all management is outsourced, Dunatov has no stock-level views, although he is increasingly questioning of the extent to which active equity outperforms low-cost beta strategies.

“Active managers are having a hard time, but they are killing themselves by not responding with lower fees to the passive alternatives.”

The number of managers the fund uses has grown with new asset classes and Dunatov says CPT now has about 15-20 “important” relationships, excluding managers in private equity and special situations debt. The fact that he highlights only “important” relationships is indicative of his intention to have fewer, more meaningful manager relationships in the future. He also says asset manager fees are set to fall.

“Asset managers have to show why their margins should be so high in a world of low returns,” he says. “Technology is taking over and I don’t know why this isn’t shown in the fees. Nor should managers charge the same basis point fee for all the money coming in, or across the asset class. A large amount of fat needs to be cut out of the asset-management industry.”

He concludes: “It is not obvious we are out of this low-beta return world, despite the Donald Trump effect. After the financial crisis of 2008, there was a clear theme of support for risk assets. Now, after so many years of strong equity returns, it is about how to consolidate that wealth.

“Given the illiquidity in our portfolio, we also need to understand how best to change this allocation in the future, as and when we need to.”

There are many great things about working as a finance journalist for a global publication. One that certainly features highly is the access I have to incredible people.

The world lost one such incredible person last week. Steve Ross, the Franco Modigliani Professor of Financial Economics at the Massachusetts Institute of Technology and a professor of finance at the MIT Sloan School of Management, unexpectedly passed away on Friday, March 3, at the age of 73.

I had the privilege of working with Steve over the past few months in preparation for our Fiduciary Investors Symposium, which will be held at MIT in October. As with many academic institutions, we need faculty support to be on campus. Steve was introduced to me by John Skjervem, chief investment officer of the Oregon State Treasury, and I had the privilege of working with him in securing event space and academic speakers for our event.

Steve didn’t know me and didn’t have to help us, but he was generous and thoughtful with his time and contacts and was interested and engaged with what we were trying to achieve.

Steve was an intellectual and a gentleman, and I am grateful for the short period of time I knew him.

In recognition of his work, and life, I wanted to share the communications from MIT and the California Institute of Technology (Caltech), where Steve was a trustee and alumnus, which beautifully describes his many contributions.

 

To the members of the MIT Sloan community

MIT’s motto of “Mens et Manus” [Mind and hand] purposefully combines rigorous academic thought with practical applications to address the world’s greatest challenges and opportunities. For illustration and inspiration in this regard, during the last two decades we have needed to look no further than to our colleague, Professor Steve Ross. The hallmark of Steve’s scholarship was a rare combination of deep insight, academic rigor, intellectual elegance, and a keen sense of practical relevance, which has made his contributions equally central to the theory and practice of finance. Steve was a discoverer of the first order. He was also a master practitioner. Indeed, as Steve once put it, “There is no other way of doing it.”

Steve Ross passed away on Friday, March 3, at the age of 73. His passing was unexpected and much too early for all who knew him. He leaves behind his beloved wife Carol, his two children, and two granddaughters, whom he adored. Steve also leaves distinct contributions to the field of financial economics, to MIT and to his many students. Trained in mathematics and economics first at Caltech and then at Harvard, Steve joined the MIT community in 1997 as the first Fischer Black Visiting Professor, after serving many years on the faculties of the University of Pennsylvania’s Wharton School [of business] and Yale. In 1998, he decided to join the MIT Sloan faculty on an ongoing basis – and we have been so much the better for it.

Steve Ross will be remembered as an intellectual giant. What is known today about the science of finance and its application owes much to Steve’s pioneering work, ranging from asset pricing to investment management and corporate finance. Steve did not believe in narrow specialisation and intellectual boundaries. It is difficult to imagine the discipline of modern finance without Steve’s contributions.

Steve made seminal contributions to the theory and practice of option pricing. His work on the risk-neutral method and the binomial model in option pricing provided a powerful tool in the modelling and valuation of financial derivatives, widely used in the financial industry. Steve’s work on the term structure of interest rates has had an equally profound impact on fixed-income markets. It has laid the theoretical foundation for the modeling and pricing of bonds and their derivatives. It has also inspired the development of dynamic equilibrium models of asset prices and the real economy. Steve pioneered the use of signaling theory and agency models in corporate finance. These models have become a cornerstone in our analysis of corporations, organisations and economic relationships.

Steve may be best known for his Arbitrage Pricing Theory, commonly known by its acronym, APT. This theory provides a general framework for analysing risk and return in financial markets. In addition to its immense influence on the theory and practice of asset pricing, the APT is ubiquitous in investment management and performance evaluation.

In addition to all his achievements in science, Steve is probably the single most influential mentor and teacher in all of financial economics today. His Socratic approach to teaching encouraged students’ ideas and enthusiasm, assisted them in developing an independent analytical mind as a scholar, and helped them find their own voice. His former students can be found in almost all major finance departments.

In this time of sadness, let us remember his leadership and what a tremendous privilege it was to count him among our ranks. We will always remember the generous and cheerful friend and colleague whose talents were so immense that he never needed to prove anything to anyone. Plans for a celebration of Steve’s life are forthcoming. In the meantime, please join me in offering our deepest sympathies to Steve’s friends in our community, and to his family.

Sincerely,

David Schmittlein | John C Head III Dean

MIT Sloan School of Management

 

 

Caltech mourns the passing of trustee Stephen Ross

Alumnus and senior trustee Stephen A. Ross (bachelor of science, 1965), whose work helped shape the development of the field of financial economics, passed away on March 3, 2017. He was 73 years old.

Ross was perhaps best known for his arbitrage pricing theory and agency theory. The first –considered a cornerstone of modern asset pricing theory – holds that price changes of all assets are driven by a limited number of underlying influences, such as gross domestic product, inflation and investor confidence.

Agency theory applies to situations that involve a principal – for example, an investor or a stockholder – who has employed an agent to make decisions on their behalf. Since the agent might be motivated to make different decisions than the principal would, the theory involves creating incentives that make it more likely that the agent will make decisions that are desirable from the principal’s perspective. This theory is particularly appropriate for large corporations, where executives often make decisions on behalf of shareholders.

Ross also helped develop techniques for pricing derivatives that are widely used on Wall Street and in other financial centres for determining the value of complex financial instruments.

“Steve Ross unstintingly applied his deep knowledge of financial economics and complex organisations to help guide Caltech,” says Caltech president Thomas Rosenbaum, the Sonja and William Davidow Presidential Chair and professor of physics. “We will sorely miss his keen insights, his generous spirit, and his infectious sense of humour.”

Ross was first appointed to the Caltech Board of Trustees in 1993. At the time of his death, he was a member of the investment committee, which he had formerly chaired. He also served on the Executive Compensation Committee and was on visiting committees for the Division of the Humanities and Social Sciences.

“As Steve was the chair of the Investment Committee when I arrived at Caltech, I had the honour and privilege of working closely with him,” says Scott H. Richland, Caltech chief investment officer. “Steve had a rare combination of brilliance, kindness and humour. His devotion to Caltech and his contributions to guiding the endowment will be greatly missed.”

For his contributions to finance and economics, Ross was the recipient of the 2015 Deutsche Bank Prize, given [every two years] to “internationally renowned economic researchers whose work has a marked influence on research concerning questions of financial economics and macroeconomics, and has led to fundamental advances in economic theory and practice,” according to the Center for Financial Studies, which awards the prize in partnership with Goethe University Frankfurt, in Germany.

Ross was born on February 3, 1944, in Boston, Massachusetts. He received his bachelor’s degree in physics, with honours, from Caltech in 1965 and his PhD in economics from Harvard University in 1970.

At the time of his passing, he was the Franco Modigliani Professor of Financial Economics at MIT and a professor of finance at the MIT Sloan School of Management. He previously held faculty positions at Yale University and the Wharton School at the University of Pennsylvania.

In addition to his academic positions, Ross worked as an adviser to various government departments – including the US Treasury, the Commerce Department, and the Internal Revenue Service, as well as the EXIM Bank. He was also a consultant to a number of investment banks and major corporations. He was a former chairman of the American Express Advisory Panel and served previously as director of General Reinsurance, the Federal Home Loan Mortgage Corporation (Freddie Mac), and the College Retirement Equities Fund.

Ross was a cofounder and principal of Ross, Jeffrey & Antle LLC, an investment advisory firm specialising in using options to enhance the performance of institutional portfolios.

Ross was the president of the American Finance Association in 1988. He was widely published, authoring more than 100 articles and co-authoring an introductory textbook on finance. He was also an associate editor of several of the field’s journals.

In addition to the Deutsche Bank Prize, Ross was the recipient of the Morgan Stanley Prize (2014), first prize in the Roger F. Murray Prize Competition (2013), the Onassis Prize for Finance (2012), and the Jean-Jacques Laffont Prize (2007), among other honours. He was a fellow of the Econometric Society and of the American Academy of Arts and Sciences.

He is survived by his wife of 49 years, Carol Ross, his children Katherine Ross and Jonathan Ross, and other family members.

A quarter of companies in the MSCI All Country World Index have a large tax gap, paying an average rate of 14.3 per cent versus the 31.8 per cent that would be expected, based on the jurisdictions where they generate revenue.

A new report from MSCI ESG Research shows that MSCI ACWI Index constituents with a tax gap would have faced additional annual tax liabilities of up to $220 billion if the entire tax gap had been plugged by regulatory reform.

In the report, MSCI ESG Research states it has seen growing demand from institutional investors for data and metrics to assist in understanding their exposure to emerging risks from global tax policy shifts. In response, it has addressed tax transparency under the corporate behaviour theme and developed a new data set and scoring mechanism within its ratings framework.

This will be rolled out in phases over the next few years. The first phase is focused on flagging companies potentially facing high regulatory, legal and reputational risks on tax-related matters, based on MSCI ESG Research’s assessment of the gap between the companies’ reported tax rate and the estimated statutory rate based on where a company generates revenue.

Investors can use this tax-gap analysis for possible engagement and to develop a more targeted set of companies from a broad, diversified universe for further due diligence.

The research also outlines the attributes that would make a company place poorly in rankings from the analysis: a high estimated tax gap; a lack of transparency around the geographical breakdown of revenue (for example, if less than 50 per cent of total revenue is disclosed in country-by-country form); and involvement in tax-related controversies in the last three years, such as regulatory fines or ongoing litigation.

 

The full report, The Tax Gap: Regulatory responses and implications for institutional investors, can be accessed here.