A Look Under the Hood

Citations · 6

• “the board members considered achieving the actuarial assumption the most important thing; beating the policy benchmark and having managers beat their respective benchmarks were secondary; and beating peers and popular indices like the S&P 500 were deemed relatively unimportant.”

  p#52 · confidence 95%

• “On the horizontal axis is the plan's ability to bear risk...On the vertical axis is the plan's willingness to bear risk – its attitude toward taking on risk and readiness to withstand the losses that might result.”

  p#6 · confidence 93%

• “Success for a defined benefit pension plan means being able to pay benefits and minimize the cost to the plan sponsor. Period. If a plan is unable to pay promised benefits, it's scant comfort that peer plans can't either.”

  p#31 · confidence 95%

• “an appropriate performance assessment period has to include both good times and bad. In other words, it should cover a full market cycle. That's the only way to distinguish investment skill from a mere bias toward aggressiveness or defensiveness.”

  p#62 · confidence 95%

• “in pure investment terms, there's no intrinsic reason for long-term investors to be concerned with volatility (as distinguished from the risk of permanent loss). Warren Buffett famously says he'd 'rather earn a lumpy 15% return than a smooth 12%.'”

  p#37 · confidence 94%

• “All board members agreed that it's impossible to foresee the future, and thus that the portfolio should be built to prepare for 'all environments' rather than base performance expectations on the ability to time markets.”

  p#46 · confidence 92%