Better investment results by indexing

Updated: Jul 10, 2021

Maryland Pension Fund Compared to Peer Group and 60-40 Balanced Index Fund, as of June 30, 2020 (All Returns Net of Fees)

The bar graph shows how the Maryland state pension fund, despite spending $500 million a year on Wall Street fees, underperforms a 60-40 index. A 60-40 index would cost less than 1/100th of Maryland's current outside money management costs. The studies below provide evidence of the benefits of indexing for pension funds endowments and foundations:

Julie Segal, “Ivy League Endowments Fail to Beat a Simple 60-40 Portfolio-Again,” Institutional

Investor, November 29, 2018.

“Public Pension Performance, Company Pension Investments to Passive Index Portfolios"

Institute for Pension Fund Integrity, August 2019.

Richard Ennis, “Institutional Investment Strategy and Manager Choice: A Critique,” Journal of

Portfolio Management, Fund Manager Selection, July 2020, pages 104-112.

Dennis Hammond, “58 Years of Endowment Performance,” Journal of Investing, August 2020

Richard Ennis, “Endowment Performance and the Demise of the Multi-Asset-Class Model," July

2020, available at” Forthcoming 2021. id=3614875

The endowment, state pension plan, and foundation investment returns have underperformed

a 60-40 index, see the following studies articles, none of which have been refuted by Wall

Street or institutional managers:

Walden, M. L. “Active versus Passive Investment Management of State Pension Plans." Journal

of Financial Counseling and Planning 26 (2): 160-171. 2015.

Warr, “The Cost Savings Associated with Indexing the North Carolina Pension Fund.”

Unpublished manuscript. 2016.

E. Tower, "Should the Equities in the North Carolina State Employee Pension Fund Be Indexed

or Actively Managed?” Economic Research Incentives at Duke (ERID), Working paper No. 210.


Jeff Hooke and Ken Yook, “The Grand Experiment: The State and Municipal Pension Fund

Diversification into Alternative Assets." The Journal of Investing Fall 2018, 27 (supplement), pp


Jeff Hooke and Ken Yook and Wenqi Chu, “Top Foundations' 10-year Plunge into Alternatives

Yields Mixed Results and High Frees,” Non-Profit Leadership Journal, September 2018.

Pew Foundation, “State Public Pension Funds' Investment Practices and Performance,"

September 26, 2018.

Cliffwater, LCC, “An Examination State Pension Performance, 2000 to 2017," September 2018.


Call your state legislator to let them know the state can save money and get better investment results by indexing.

For information on fiscal 2020 fees, see the pension funds 2020 annual report. Below are excerpts from pages 73 and 86.