Benefits, Investments and Financial News

STRS Ohio Investment Returns, Costs Stack Up Well Against Peers

In December, CEM Benchmarking, a leading global research company, shared the results of its 2016 investment benchmarking study with STRS Ohio. The report compared investment data — both performance data and costs — for the five-year period ending Dec. 31, 2016, from more than 300 pension funds from around the world. Results of the study showed STRS Ohio’s five-year total return of 9.7% ranked in the top quartile of CEM Benchmarking’s U.S. public fund universe. STRS Ohio’s strong performance was primarily due to its asset mix, which has a higher weighting in U.S. stocks and a lower weighting in fixed income than most other funds.

STRS Ohio also ranked third in its peer group of 17 large U.S. public pension fund sponsors for lowest investment costs. STRS Ohio’s strategy of using internal investment managers for about 70% of the system’s assets was the primary reason for its overall low costs. The report showed that STRS Ohio saved about $101 million in calendar year 2016 by using the internal management approach. The savings is based on the peer group’s median external management costs.

For years, STRS Ohio has been recognized for its cost-efficient method of relying heavily on internal asset management. In recent years, other large public pension funds, including the California Public Employees Retirement System, as well as the California and Texas Teachers Retirement Systems have expressed plans to follow suit and increase their use of internal management to gain cost efficiencies.

See the table of contents →