The brief’s key findings are:
- As state and local pension plans have increased their investments in alternative assets, they have taken on more external asset managers.
- However, due to concerns about fees, some large plans have started to reevaluate the size of their external team.
- This study explores how the number of managers affects fees and after-fee returns, controlling for plan size, asset allocation, and extent of external management.
- The results suggest that a significant reduction in the number of managers could reduce fees somewhat, but, in terms of after-fee returns, it matters who gets cut.