Jeremy Grantham*: “… you can sit down with a great, sexy Dutch pension fund dripping with Ph.Ds, and you have lunch and you talk about risk 12 times, and each of the 12 times they did not mean the risk of the beneficiary, the pensioner losing money. They meant the risk of deviating from their precious benchmark and putting them into some career risk with their bosses. And nobody thinks of risk as the actual real risk to the beneficiary. It’s actually almost unethical….”
Jeremy Grantham*: “….Keynes described (80 yrs ago!) a row of bankers marching of the cliff together. He said as long as they make sure they’re all together, their careers are reasonably safe. That’s a pretty good description of ’08. If you wanted to lose your job, you had to do something spectacularly incompetent. Otherwise, you’re in decent shape”
Huang and Mahieu (2010) find that up to ’06 on average, Dutch pension funds do not generate excess return relative to a predetermined benchmark. #
Are Dutch pensions safe in the hands of career minded asset managers?
* Morningstar Investment Conference 2012
# Large funds perform better than smaller funds.