Public Pensions Cannot Stop Chasing Performance

At the California Public Employees’ Retirement System, the biggest public pension in the U.S., 1.6 percent of the assets were invested in hedge funds Photograph by Melanie Stetson Freeman/Getty Images

Two basic principles of investing hold up remarkably well: Past results really don’t predict future performance, and high fees eat away at your returns. Smart investors don’t chase performance (as much as they can help themselves) and keep costs to a minimum. Unfortunately for taxpayers, the experts who run public pension funds aren’t following these rules. What’s more, they have little incentive to start.

To continue reading this article you must be a Bloomberg Professional Service Subscriber.