I estimate that statewide pension funds in the United States incur annual investment expenses averaging 1.3% of asset value. A sample of 24 of them underperformed passive investment during the past decade by an average of 1.4% a year. And yet, those same funds report that they outperformed...

Public employee pension funds, endowment funds and other nonprofit institutional investors in the U.S. have a serious performance problem. They have underperformed properly-constructed, passively-investable benchmarks by a wide margin since the Global Financial Crisis (GFC) of 2008, some 13...

A fairy tale has sustained alternative investing since the Global Financial Crisis (GFC) of 2008. Here I parse the fairy tale and then set the stage for the future of institutional investing. Freed of the misperception that maintaining several asset-class silos is necessary to achieve efficient...

Investment policy for public defined benefit pension plans in the US most often springs from consideration of the needs of the plan through the eyes of its trustees, who seek to do what is best for their plan. Here I explore an alternative perspective for making this important public policy...

Herding is human nature. There is ample evidence of it in the management of public pension funds in the United States. Their effective equity exposures cluster about an average of approximately 70%. Extreme diversification is universal. These two aspects of herd behavior have proven benign....

Public pension funds report their rates of return and provide benchmark comparisons in their annual reports. There is evidence that reported performance is significantly biased in the funds’ favor by virtue of their use of laggard benchmarks. I propose an alternative approach to evaluating...

Managers of institutional portfolios have long been seen as among the elite in the investment field. They typically possess advanced degrees and/or other professional credentials. They are fiduciaries for the largest and most complex investment portfolios on the planet. Many are paid fabulously....

Despite all the attention paid to alternative investments in recent years, there has been little study of their impact on the performance of institutional investment portfolios, e.g., those of pension plans and endowed institutions. This paper attempts to help fill the void. It shows that, since...

Institutional investors have failed to apprehend the difference between investment policy and investment strategy. Most trustees, CIOs and consultants don’t appear to know where one leaves off and the other begins. Trustees should concern themselves with institutional investment policy, the...

Most institutional investors, such as public pension funds and endowments, report their performance using biased benchmarks. The benchmarks are biased downwardly, meaning their returns tend to be less than a fair return for the market exposures and risk exhibited by the institutions’...