Eight percent is achievable in a low fee highly diversified balanced fund (2/3 stocks, 1/3 bonds). The Vanguard Wellington Fund has been in existence since 1929. Its average annual return since 1929 has been 8.29%. Its average return over the past 10 years , which includes the 2008 recession, is 8.38%. Its average annual return over the past 5 years is 11.98%, three years 13.75%, and one year 11.94%.
Had California simply put its pension money in Wellington ten years ago, the fund would be solvent and it could have saved the cost of an entire bureaucracy. Fire the administrators today and let a private sector firm with decades of proven performance manage the money.
imho oil will go to $35@ barrel by 2025. As the cost of oil drops, revenues to california’s institutions will rise & they’ll be fully funded before crunch time.
Vanguard Wellington Fund https://personal.vanguard.com/us/funds/snapshot?FundId=0021&FundIntExt=INT
Characteristics as of 10/31/2014
Fund total net assets $87.8 billion
CalPers managed $257.4 billion in assets, 2013.
The 124 billion dollars of income in the nine-year period 1999-2007 has been reduced in half by the combined losses of 67 billion in 2008 and 2009. This totals to 57 billion dollars of investment income during this 11-year period, or about 5.1 billion a year on an investment portfolio of 261 billion in October 2007 and down to 186 billion in October 2008. This is a 2.5% return on investment over the 11-year period.
http://en.wikipedia.org/wiki/CalPERS#Investment_income_gains_and_losses_1999-2009
Not that VWELX is the only fish in the ocean, but unlikely they would expand it to the size of CalPers.
No, they would simply have promised more and spent more and they’d still be in the same boat.
If the investment was actually returning 8%, they would have used 15% for their predictions so they could keep everyone paid and happy...
u do understand that the larger a fund grows the more difficult it is to garner such returns? See how Pimpco has performed over the past few years? The law of diminishing returns comes into play. By the way they do allocate huge sums to hedge funds and the like some of whom do throw that money into other funds. (funds of funds).
But then is wishes were wings then pigs would be a flying!