Study Shows STRS Ohio Has Top Quartile Investment Returns, Low Investment Costs Compared to Peers
In December, CEM Benchmarking, a leading global research company, presented the results of its annual Investment Cost Effectiveness Analysis Report. The report compared investment data — both performance and cost data — for the five-year period ending Dec. 31, 2018, from more than 300 global pension funds. The study revealed that STRS Ohio’s five-year total net return of +6.25% placed in the top 25% of CEM’s U.S. public fund universe. STRS Ohio’s top quartile performance was primarily due to its asset mix, which had a higher weighting in one of the better performing asset classes over the past five years (U.S. stocks) and a lower weighting in one of the weaker performing asset classes during this time period (fixed income). The report also noted STRS Ohio’s investment costs were second lowest in its peer group of 17 large U.S. public funds for calendar year 2018. This is primarily due to STRS Ohio’s low cost implementation style (managing about 70% of assets in-house), and the report found STRS Ohio paid less than its peers for similar services. The report estimated STRS Ohio saved about $107 million in calendar year 2018 by using the internal management approach. This figure is based on the peer group’s median external management costs and is greater than STRS Ohio’s entire operating budget for fiscal year 2020 ($104.4 million).