The majority of plans that manage some or all of their own money, manage less than 50% of total assets, according to Pensions & Investments' plan sponsor survey for data as of Sept. 30, 2016. Fewer plans manage more than 75% of their own assets than they did in past years, while more have increased their internal management from less than 25% of total assets.
The largest three public plans surveyed by assets, CalPERS, CalSTRS and New York State Common, manage 70%, 46% and 55%, respectively, of total assets internally. Georgia Teachers Retirement System and Alabama Retirement Systems of are the only two plans to respond that they manage all assets in-house.
The move to bring management in-house has been driven by the lack of alpha from active management, with plans believing that internal management will reduce costs. The most significant challenge to this structure is hiring and retaining the talent needed to be successful. Building on this trend, plans are also looking to bring risk management into the internal fold, believing that a more holistic streamlined process will be able to assess both performance and risk on demand.