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The question which isn’t answered in the article is: how would the fund have done if passively invested in the market? If the market lost money over the same t

by chrisa 12y ago

The question which isn’t answered in the article is: how would the fund have done if passively invested in the market? If the market lost money over the same time period, then although extremely high, the fees are a relatively "good deal" (since the fund was up $40M, and the alternative would be losing money). If they’re talking about the last 10 years however, it looks like the market should have returned about 70%, which makes the fund manager's performance look even worse.

totalrobe 12y ago
S&P 500 returned about 92.09% from 2004 - 2014. They referenced it being a 160 billion dollar fund so they really should have been looking at returns of closer to 100 billion... http://ycharts.com/indicators/sandp_500_total_return_annual http://ycharts.com/indicators/sandp_500_total_return_annual *although if all large pensions/trusts/endowments were passively invested in the market, some of these financial companies on the s&p list would not have been able to steal so much from pensions so i'm wondering what type of effect that would have had on total market returns
- kasey_junk 12y ago
  Not that it impacts the heart of your comment, but that is not risk adjusted returns. To get that exact return you'd have to have 100% allocation in the s&p 500, which would also be cause for articles...
- encoderer 12y ago
  Nice try. $SPX is not where you want $160bn of pension money. 10% maybe, with similar investments in treasuries, commodities, cash, etc.
  - bradleyjg 12y ago
    I somehow got downvoted for pointing this out yesterday, but with target return rates of 7-8%, pensions can't invest in what most of us would consider a prudent portfolio. At least not in a low inflation environment (since targets seem to all be nominal rather than real). While I would agree that a pension fund shouldn't be in all equities (or investment with similar risk profiles) if the fund managers are mandated to target 7.5% returns its hard to see how they can include a sizable cash or treasury component and expect to hit that.
    - encoderer 12y ago
      Leverage
  - totalrobe 12y ago
    That is true but there are safe investment avenues that should be returning more than .025% over 10 years (40 mil / 160 bil).

by chrisa 12y ago

totalrobe 12y ago

S&P 500 returned about 92.09% from 2004 - 2014. They referenced it being a 160 billion dollar fund so they really should have been looking at returns of closer to 100 billion... http://ycharts.com/indicators/sandp_500_total_return_annual http://ycharts.com/indicators/sandp_500_total_return_annual *although if all large pensions/trusts/endowments were passively invested in the market, some of these financial companies on the s&p list would not have been able to steal so much from pensions so i'm wondering what type of effect that would have had on total market returns

kasey_junk 12y ago
Not that it impacts the heart of your comment, but that is not risk adjusted returns. To get that exact return you'd have to have 100% allocation in the s&p 500, which would also be cause for articles...
encoderer 12y ago
Nice try. $SPX is not where you want $160bn of pension money. 10% maybe, with similar investments in treasuries, commodities, cash, etc.
- bradleyjg 12y ago
  I somehow got downvoted for pointing this out yesterday, but with target return rates of 7-8%, pensions can't invest in what most of us would consider a prudent portfolio. At least not in a low inflation environment (since targets seem to all be nominal rather than real). While I would agree that a pension fund shouldn't be in all equities (or investment with similar risk profiles) if the fund managers are mandated to target 7.5% returns its hard to see how they can include a sizable cash or treasury component and expect to hit that.
  - encoderer 12y ago
    Leverage
- totalrobe 12y ago
  That is true but there are safe investment avenues that should be returning more than .025% over 10 years (40 mil / 160 bil).