The $71.9 billion Mass PRIM pores over the numbers to be sure it pays active managers only for skill. That's just one way it uses intense analysis to deliver.
Hiro Mizuno, CIO of the world's largest investor, told the CFA conference that in exchange for multi-year commitments its mandates would now claw back fees when firms don't reach alpha targets.
Many active managers in Canada were able to exceed a passive benchmark return by 50-100 basis points, net of fees, for the decade ending December 31, 2016, Russell Investments research has found.
Texas Teachers has made extensive changes to its equities portfolio, increasing risk premia, reducing active management and applying new strategies developed by the fund’s research arm.
The Canada Pension Plan Investment Board has increased its focus on emerging economies, using active management to access local expertise and maximise its advantages of scale.
Australia’s sovereign wealth fund has revamped its equities portfolio to take on deliberate factor risk and target idiosyncratic risk. The fund’s head of equities, Björn Kvarnskog, explains.
MSCI research has shown that, among top-performing funds, more than half of active returns come from factors, rather than manager skill, and style factors have the biggest impact.
The UK Financial Conduct Authority’s upcoming report is expected to call for consolidation in pension funds, tighter controls on active management fees and greater transparency.
High management margins and low returns will continue to push owners towards passive investments. But active managers can add value in asset classes that require special expertise or access.
A disillusionment with active has led Minnesota to double its passive allocation in public equities, a strategy that sits alongside a commitment to long-term investing in private markets.
Long-term investment in real estate, infrastructure and asset based lending, including financing ships and aircraft where traditional bank backers have fled, make up the German fund’s strategy.
A highlight of the Fiduciary Investors Symposium at Chicago Booth School of Business was an intimate Q&A session with the “Father of Modern Finance” and Nobel Laureate, Eugene F. Fama.