How do fees affect plans' ability to beat their benchmarks?

Aubry, Jean-Pierre, and Caroline V. Crawford. “How do fees affect plans' ability to beat their benchmarks?”. State and Local Pension Plans 61, Chestnut Hill, Mass.: Center for Retirement Research at Boston College, August 2018. http://hdl.handle.net/2345/bc-ir:108133.
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Abstract

The brief's key findings are: (1) One way that public pension plans assess their investment performance is to compare returns by asset class to selected benchmarks. (2) Plans pay fees to external asset managers with the expectation that they will exceed the benchmarks. (3) As these fees have come under greater scrutiny, the question is whether higher fees help plans outperform their benchmarks. (4) The analysis, using new data for 2011-2016, found that plans that paid higher fees experienced worse performance relative to their benchmarks. (5) This finding held across all major asset classes, but was particularly pronounced for alternative assets, such as private equity and hedge funds.

Title
How do fees affect plans' ability to beat their benchmarks?
Author
Aubry, Jean-Pierre
Crawford, Caroline V.
Center
Center for Retirement Research
Genre
report
Date Issued
August 2018
Publisher
Center for Retirement Research at Boston College
Series Title
State and Local Pension Plans
Series Number
61
Persistent Link
http://hdl.handle.net/2345/bc-ir:108133
Use Restrictions
These materials are made available for use in research, teaching and private study, pursuant to U.S. Copyright Law. The user must assume full responsibility for any use of the materials, including but not limited to, infringement of copyright and publication rights of reproduced materials. Any materials used for academic research or otherwise should be fully credited with the source. The publisher or original authors may retain copyright to the materials.
Subject
State and Local Pensions

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