US pension funds play safe with passive
Monday 10 May 2010
We do not have billionaires as clients. But hopefully you would expect billionaires or those with billions under management to have carried out due diligence on how to invest. I was interested in this article in the FT. It discusses the passive investment debate…with examples.
“ the Ohio Bureau of Workers’ Compensation, which handed State Street Global Advisors $1.3bn (£857m, €974m) in passive mandates, as well as the San Jose (Calif.) Police and Fire Department Retirement Plan, which moved more than $250m of active large-cap equities into passive products.
And other large state funds are looking to add more passive to their mix, including the $100bn Florida State Board of Administration and the $5bn New Hampshire Retirement System.
Florida, for its part, is considering adding to its already passive-heavy US equity portfolio by taking from traditional active managers as well as its enhanced equity portfolio. The fund, which is also looking at doing the same for its non-US equity allocation, already has a US equity portfolio that allocates over 80 per cent to passive investments”
So the question that investors should ask is why? Why does it make sense for these institutions to invest in this way? Do they know something you don’t? Perhaps they do, especially if they are backing their judgement with billions.
So if you have £100,000 or £1,000,000 or £10m, perhaps taking seriously the long term benefits of using passive funds with a risk adjusted asset allocation strategy actually works.
posted by Murray Round Wealth Management @ 14:37,
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Nicholas Round
Nic is the Managing Director of Murray Round Wealth Management Limited, who seeks to ensure the advice provided is truly independent. Based in Shropshire with clients local, national and worldwide, Nic has strived to find the best possible service for his clients needs, by researching and studying the market, trends and philosophies. Nic strongly believes Asset Class Management will bring his clients Financial Freedom, Independence and Happiness.
Kirsty
Kirsty is our communication guru. Managing information requires considerable due diligence and her passion for organisation gives the clarity we all seek. From Shropshire, with a Psychology Degree and much travelling, she is now back in Shrewsbury...and London often, keeping us all at Murray Round focused.
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