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.
Public plans managing 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.