What Explains Differences in Public Pension Returns Since 2001?

The brief’s key findings are:

• Investment returns for state and local pension plans varied over 2001-2016 from 6.3 percent for the top quartile to 4.6 percent for the bottom.
• The variation could be due to differences in asset allocation and/or to the returns by asset class.
• The analysis found that asset allocation – in equities, fixed income, and alternatives – was broadly similar across plans, while asset class returns showed more variation.
• Therefore, asset class returns turned out to be the primary reason for the disparities in overall returns.