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    PUBLIC SCHOOL EMPLOYEES’ RETIREMENT SYSTEM (PSERS)

    In the News: Passive Investing

    April 13, 2017

    ​​​You may have seen a recent press release from Pennsylvania Treasurer Joe Torsella announcing the move of Treasury’s public equity assets to a passive investment strategy.  PSERS supports the Treasurer’s move to passive investing, also known as indexing.  PSERS believes that the U.S. publicly-traded equity market is very efficient and has been passively investing all of its U.S. public equity investments for many years.

    As a PSERS member you may be interested to know that PSERS also passively invests 100% of its public U.S. equity investments using its own internal investment staff to do so. Currently we have $3.6 billion of U.S. publicly-traded equity investments under internal passive management, saving an estimated $700,000 per year in management fees versus hiring external passive manager and an estimated $10 million per year in management fees versus hiring external active managers.  PSERS also manages $2.9 billion (approximately 45%) of its non-U.S. publicly-traded equity exposure under internal passive management, saving an estimated $2.3 million per year versus hiring external passive managers and an estimated $12 million per year in management fees versus hiring external active managers.
     
    PSERS has an “Index First” mentality and has long been a leader in equity indexing.  In fact, in 1990 PSERS started one of first internally managed S&P 500 Index funds (large cap companies) among public pension funds and was one of the largest indexers for many years.  PSERS was also invited to be a founding member of the Standard & Poor’s Institutional Indexing Advisory Board and was a member of that Board for over 10 years. Standard & Poor’s is one of the world’s leading index providers.
     
    PSERS also has been a leader in the nation in implementing other index tracking portfolios as follows:
    ·         Started second S&P 400 Index fund (mid cap companies) among all  institutional investors in the nation in 1992
    ·         Started first S&P 600 Index fund (small cap companies) among all institutional investors in the nation in 1994
     
    Among public pension funds, PSERS led the nation in implementing indexing as follows:
    ·         Started first internally-managed MSCI EAFE (Europe, Asia, Far East) Index fund in 1997 (MSCI is another leading index provider)
    ·         Started first internally-managed MSCI ACWI ex US (All-Country World Index excluding U.S.) Index fund in 2004
     
    You should be proud to know that PSERS is a nationally recognized leader among public pension fund investors and has advised numerous other public pension plans on how to start and run index operations.
     
    For more information on PSERS’ investments, go to PSERS Investment Program web page.

    PSERS Media Contact Details

    Steve Esack

    Press Secretary 717.720.4770
    Public School Employees' Retirement System Media

    L. Paul Vezzetti

    Communications Director 717.480.8405
    Public School Employees' Retirement System Media