Pension Funds Should Think Twice About Alternatives
They’re fine for those with access to the best funds, but the rest face higher costs and mediocre results.
Be careful about that move.
Photographer: Sebastian Reuter/Getty Images
High-performing alternative investments are great if you can find them, but pension plans shouldn’t count on it.
The Pew Charitable Trusts recently published its latest report on the investment practices and performance of the 73 largest state public pension funds as of the 2016 fiscal year. The big development is that pension funds are moving their money from stocks to alternatives such as private assets and hedge funds. The average allocation to alternatives more than doubled to 26 percent in 2016 from 11 percent a decade earlier, with a roughly equal percentage leaving stocks.