Cost of Management
By reducing costs through its asset allocation, managing more funds internally and passively, and negotiating lower fees for external managers it hires, SWIB generates millions of dollars in savings compared to its peers.
Internal Asset Management Costs Less
SWIB optimizes its costs, invests in its infrastructure, and spends less than its peers, according to CEM Benchmarking, an independent provider of objective cost benchmarking for public pensions plans. More than half of SWIB’s assets under management were managed internally.
CEM’s most recent report found that for calendar year 2018 (the most recent data available), SWIB’s investment cost of 44.7 basis points (bps) was below its benchmark cost of 50.0 bps. (One basis point is equal to 0.01 percent, 1/100th of a percent, or 1 cent for each $100.) This confirms SWIB’s costs were lower than its peers. SWIB’s costs were lower because of more internal asset management and less investment in higher cost asset classes. SWIB’s five-year performance placed in the positive value added/low cost quadrant in CEM’s cost effectiveness chart.