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Old 07-13-2018, 01:17 PM
 
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i did not say pension fund . they can't beat indices. they have to have way to much in short term money ,every pension fund is different because of liability time frames and existing claims being paid out . some are required by the states .

many states require a certain amount invested in structural bonds as well . it is a totally different investment world and most of what they have is not going to be comparable to throwing 100% in to just index funds or following standardized allocations . .

Last edited by mathjak107; 07-13-2018 at 01:28 PM..
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Old 07-13-2018, 06:48 PM
 
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Originally Posted by mathjak107 View Post
i did not say pension fund . they can't beat indices. they have to have way to much in short term money ,every pension fund is different because of liability time frames and existing claims being paid out . some are required by the states .

many states require a certain amount invested in structural bonds as well . it is a totally different investment world and most of what they have is not going to be comparable to throwing 100% in to just index funds or following standardized allocations . .
I know. I administered one. I did not have fiduciary responsibility for the rules nor the investing as our Board did. Most pension funds do not have those requirements you mentioned, but perhaps some do. It's the fees and active management that makes it virtually impossible to beat or come close to the indices longer term. Even though the Funds say they don't "market time" what tends to happen with most of them is that once an investment underperforms they drop it or swith or re-allocate at exactly the wrong time, thus they "do" market-time.

I should have said "pension funds" but I was assuming since the thread was about that, it would are assumed.
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Old 07-14-2018, 12:18 AM
 
Location: Silicon Valley
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Originally Posted by Burkmere View Post
Find me a major pension fund that has beaten the broader indices or come close over the past 30 years. I don't think there are any. I should have restricted my response to major pension funds. Net of fees and expenses I'm not aware of any.
I don't know if you can compare them though. Tell me an index that can say trade on 100, but I'm only paying you 60. Oh, but do pay out...constantly. I think it's a different animal.
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Old 07-14-2018, 09:32 AM
 
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Originally Posted by artillery77 View Post
I don't know if you can compare them though. Tell me an index that can say trade on 100, but I'm only paying you 60. Oh, but do pay out...constantly. I think it's a different animal.
Also, many have been very mismanaged. Many are only 60% funded or less. So it's not only not performing as well or even as close to as well as a major index, but it's that they are performing significantly lower and are also significantly underfunded. I don't want to get into politics, but a lot of the reason is that the assumptions are too unrealistic and the pressure to keep the pensions at a certain level without making the necessary adjustments (new pension tiers, higher contribution levels, a more realistic performance assumption, etc. ) are not made because of the influence that outside forces (ok, strong unions, etc) have on the Retirement Boards, etc.
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Old 07-14-2018, 07:01 PM
 
Location: Paranoid State
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If we take a look at the entire universe of investable assets -- the "market portfolio" -- it represents essentially every stock, bond, future, commodity, fine art, precious metal, precious gemstone, real estate, etc.

If you are a passive investor and hold a slice of the "market portfolio," you are guaranteed to get an ROI of the Market Return.

Pension managers typically, but not always, engage in active management of the portfolio. They attempt to beat the Market Return.

Half of those active managers will beat the market. Half will be beaten by the market, because it all adds up to the market return. (OK, half of the invested assets will beat the market and half will be beaten by the market.)

That's their gross performance. Then you have to subtract from that the compensation of those pension managers - and they are very well compensated.

An interesting question is if an active pension manager "beat the market," did the active manager do so by skill -- or by dumb luck? The data show that there is a tiny, tiny, sliver of active managers who appear to possess skill. All the rest get their returns -- either beating the market or being beat by the market -- by dumb luck.
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Old 07-15-2018, 01:41 AM
 
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morningstar found that if you look at the 20% biggest funds in dollars they have beat their index's 80% of the time . just follow the money and generally the mega funds will consistently do better .. just looking at fidelity which are the funds i follow that has been pretty true , funds like contra , growth company , blue chip growth have all been beating passive investing for a long long time now.

the problem is not about picking better stocks most of the time . it is about so many potentially good managers having small funds and internal expenses kill their performance . so some years they do exceptionally well and are at the top and then the next year expenses over come a less amount of alpha .

fund managers are also bound by fund objectives and rules and can't just go anywhere like we can with our portfolio's . my insight growth mix easily beat a total market fund over the last 30 plus years . the fidelity insight sector model beat it by almost 2x which is amazing .

so it is not about stock picking as much as it is getting a portfolio together that works coherently as well as changes with the big picture as time goes on .

buy and die has never been a style of investing that interested me .

Last edited by mathjak107; 07-15-2018 at 01:52 AM..
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