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