A lot has been written about the superiority of the “Canadian model” for managing pensions, but can a value be assigned to this organisational design structure?
A CEM Benchmarking study finds that size, asset mix, investment style and complexity determine the level of front-office and back-office staff but external manager fees are the big expense.
Keith Ambachtsheer says net value added for members, not absolute cost, is the way to evaluate funds, and points to a report from Australia’s Productivity Commission as a sensible blueprint.
Large funds outperform small funds mostly mainly due to the cost savings of internal management. So when does internal management make economic sense for a fund? It’s at a much lower AUM than you might think. CEM Benchmarking analysed a universe of 186 pension funds globally. That universe is split into four groupings: 77 funds... Read more »
Asset owners, on average, add 15 basis points of value above their asset class benchmarks after fees, according to an extensive study by CEM Benchmarking. The survey, which measured 6,666 data points from a global set of defined benefit plans, and some sovereign wealth funds and buffer funds, from 1992-2013. Gross of investment fees, funds... Read more »
There is no 3 per cent illiquidity premium in private equity, according to research by CEM Benchmarking. A cost drag on private assets cancels out the returns of investing in private equity and real estate for those investors that outsource to external providers, the research finds. CEM Benchmarking, which has a database of 354 pension... Read more »
The findings from the first review of the Finnish pension system, commissioned by the Finnish Centre for Pensions, were handed down by Nicholas Barr from the London School of Economics and Keith Ambachtsheer from the Rotman International Centre for Pension Management last month. Although Helsinki in January is far from a party Ambachtsheer and Barr... Read more »
While the trend for most large institutional investors is to insource asset management, the $85-billion Washington State Investment Board (WSIB) has decided to take a different path. Much-cited CEM Benchmarking research shows that funds with internal-management platforms are better performers after cost, and this is largely driven by the lower costs of internal management. Many... Read more »
A defining characteristic of leading pension funds globally is the cost savings garnered from in-house investment management. An organisational design study by CEM Benchmarking has revealed that “leading” funds have an average of 49 per cent of assets managed in-house, and yet the internal staff and non-manager third-party costs make up only 15 per cent... Read more »
Cost is the flagrant motivation in the trend for US pension funds to move assets in-house, but as this article explores, budgets also need to extend to the demands of investment research, travel and staff incentive compensation.
The International Centre for Pension Management’s Keith Ambachtsheer believes if pension fund stakeholders “fessed up” about the real state of their funding situation, the business of pension fund management, and its subsequent investments, will have a brighter future. He spoke to Amanda White. There are not many pension funds around the world that can satisfy... Read more »
US public sector funds spend less than half the time and resources on risk management than the average of their global peers according to a survey of 58 funds by Canadian-based CEM Benchmarking.