Investments As part of its investment strategy, the Company establishes a level of cash and highly liquid short-term and intermediate-term securities that, combined with expected cash flow, it believes is adequate to meet its payment obligations. Due to the low fixed maturity investment returns, the Company invests in equity securities, merger arbitrage securities, investment funds, private equity, loans and real estate related assets. The Company's investments in investment funds and its other alternative investments have experienced, and the Company expects to continue to experience, greater fluctuations in investment income. The Company also attempts to maintain an appropriate relationship between the effective duration of the investment portfolio and the approximate duration of its liabilities (i.e., policy claims and debt obligations). The effective duration of the investment portfolio was 2.4 years at December 31, 2020 and 2.8 years at December 31, 2019. The Company’s investment portfolio and investment-related assets as of December 31, 2020 were as follows: Fixed Maturity Securities. The Company’s investment policy with respect to fixed maturity securities is generally to purchase instruments with the expectation of holding them to their maturity. However, management of the available for sale (1) Pre-refunded securities are securities for which an escrow account has been established to fund the remaining payments of principal and interest through maturity. Such escrow accounts are funded almost exclusively with U.S. Treasury and U.S. government agency securities. ($ in thousands) Carrying Value Percent of Total Fixed maturity securities: U.S. government and government agencies $ 603,871  2.9  % State and municipal: Special revenue 2,252,067  10.8  State general obligation 493,147  2.4  Local general obligation 450,624  2.2  Pre-refunded (1) 276,672  1.3  Corporate backed 214,473  1.0  Total state and municipal 3,686,983  17.7  Mortgage-backed securities: Agency 630,784  3.0  Residential-Prime 199,481  1.0  Commercial 187,717  0.9  Residential-Alt A 8,803  —  Total mortgage-backed securities 1,026,785  4.9  Asset-backed securities 3,194,586  15.3  Corporate: Industrial 2,564,475  12.3  Financial 1,575,903  7.6  Utilities 421,165  2.0  Other 110,038  0.5  Total corporate 4,671,581  22.4  Foreign government 975,563  4.7  Total fixed maturity securities 14,159,369  67.9  Equity securities available for sale: Common stocks 350,181  1.7  Preferred stocks 275,486  1.3  Total equity securities available for sale 625,667  3.0  Cash and cash equivalents 2,372,366  11.4  Real estate 1,960,914  9.4  Investment funds 1,309,430  6.3  Arbitrage trading account 341,473  1.6  Loans receivable 84,913  0.4  Total investments $ 20,854,132  100.0  % 48