This is a very good idea, especially knowing that our pension funds have a deep history of making questionable investments. I suppose the risk would be mitigated by the timing of making these changes.
The only downside I see is the short term risk of investing the way when markets are at their highest- we can expect a downturn after the election.
Pretty outrageous that all of the "management" of these funds benefited the managers a whole lot more than the pensioners.
I'd have to agree! I can see the argument for why you might want management for something like PE/VC investments (though I'm still not sure it's worth it), but I'm particularly puzzled by how many active managers the funds have for things like public equities, where the managers really don't add any 'access' value at all and the fees strike me as more purely rent-seeking from the funds.
I take your point on that timing downside. I think that should be mitigated in part by the fact that (I assume) it'll likely take time to unwind the various management contracts / agreements we have for the funds, so we'd likely not be experiencing one massive change in strategy all at once.
At the very least, they could just start putting all new contributions into a new index-based strategy and leaving existing contributions/investments where they are - over a longer time horizon, that'd result in things shifting towards the index strategy, I'd think (considering how significant future contributions need to be compared to our current assets).
This is a very good idea, especially knowing that our pension funds have a deep history of making questionable investments. I suppose the risk would be mitigated by the timing of making these changes.
The only downside I see is the short term risk of investing the way when markets are at their highest- we can expect a downturn after the election.
Pretty outrageous that all of the "management" of these funds benefited the managers a whole lot more than the pensioners.
I'd have to agree! I can see the argument for why you might want management for something like PE/VC investments (though I'm still not sure it's worth it), but I'm particularly puzzled by how many active managers the funds have for things like public equities, where the managers really don't add any 'access' value at all and the fees strike me as more purely rent-seeking from the funds.
I take your point on that timing downside. I think that should be mitigated in part by the fact that (I assume) it'll likely take time to unwind the various management contracts / agreements we have for the funds, so we'd likely not be experiencing one massive change in strategy all at once.
At the very least, they could just start putting all new contributions into a new index-based strategy and leaving existing contributions/investments where they are - over a longer time horizon, that'd result in things shifting towards the index strategy, I'd think (considering how significant future contributions need to be compared to our current assets).