Heads are rolling at the top of the portfolio management food chain, with a leading investor showing that the industry will increasingly have to prove its worth.
A huge pension fund continues to make moves signalling to advisors that some things never change when it comes to satisfying clients.
“We need to do a better job of keeping track of how those managers evolve, what strategies they’re good at, what they may not be good at to ensure they’re effectively earning their place at the table every year,” Calpers chief operating investment officer Wylie Tollette told the Wall Street Journal giving the $300 billion pension fund a “B-minus” at doing these tasks. “For an organization like Calpers we need to be an A, if not an A-plus.”
Calpers is one of the biggest pension funds anywhere. It currently pays $1.6 billion in fees to 212 external fund managers, but is now set on reducing that number of professionals to 100 over the next five years. The cull would save its pensioners hundreds of millions of dollars in fees.
If it can ride its external managers hard in order to deliver lower fees and better performance, there’s no reason why your clients can’t do the same.
Are you doing an A-plus job of allocating your client’s capital?
Still, it’s not only about fees.
By reducing the number of external managers in half, Calpers will have an easier time keeping track of the performance of the 100 or so that make the cut suggesting too much diversification can be a bad thing, especially when it comes to pensions.
“Calpers is taking the next step in what we see as a multiyear effort to reduce risk, cost and complexity so that we can deliver the investment returns that are necessary to meet our obligations,” Calpers CIO Ted Eliopoulos told reporters last week.
“We need to do a better job of keeping track of how those managers evolve, what strategies they’re good at, what they may not be good at to ensure they’re effectively earning their place at the table every year,” Calpers chief operating investment officer Wylie Tollette told the Wall Street Journal giving the $300 billion pension fund a “B-minus” at doing these tasks. “For an organization like Calpers we need to be an A, if not an A-plus.”
Calpers is one of the biggest pension funds anywhere. It currently pays $1.6 billion in fees to 212 external fund managers, but is now set on reducing that number of professionals to 100 over the next five years. The cull would save its pensioners hundreds of millions of dollars in fees.
If it can ride its external managers hard in order to deliver lower fees and better performance, there’s no reason why your clients can’t do the same.
Are you doing an A-plus job of allocating your client’s capital?
Still, it’s not only about fees.
By reducing the number of external managers in half, Calpers will have an easier time keeping track of the performance of the 100 or so that make the cut suggesting too much diversification can be a bad thing, especially when it comes to pensions.
“Calpers is taking the next step in what we see as a multiyear effort to reduce risk, cost and complexity so that we can deliver the investment returns that are necessary to meet our obligations,” Calpers CIO Ted Eliopoulos told reporters last week.
