Ohio Fund Saves with Internal Managers

September 16, 2011 (PLANSPONSOR.com) – An analysis has found that the State Teachers Retirement System (STRS) of Ohio saved $94 million in 2010 by managing about 80% of its total assets with in-house staff.

A CEM Benchmarking report, “Investment Cost Effectiveness Analysis” was shared with the STRS board at its September meeting. The analysis compares cost and return performance to a custom peer group of pension systems.  

The analysis compared those internal management costs to the median management costs that the peer group pays for external management. The report also noted that STRS Ohio’s five-year total return of 4.4% was ahead of its policy return of 4.2%. The five-year value added figure of 0.2% was above the peer median.  

In other news, Callan Associates, the Retirement Board’s investment consultant will create a series of asset mix alternatives with different levels of risk/reward for consideration. This “modeling” will include the June 30, 2011, valuation results. The study will also evaluate the impact of different interest rate and economic scenarios on STRS Ohio’s liabilities.