This study outlines fees and investment returns for state pension funds with fiscal years ending June 30, 2014. The study concludes that pension funds with the highest fees, as a percent of assets, recorded inferior investment returns, on average, versus those in states with the lowest fees. This conclusion contradicts the assumption that Wall Street advice helps clients achieve superior returns.

The study also shows that a passive index that mimics the investment allocation of the typical state pension fund outperformed the peer group median by 1.62 percent per year over a five-year period. On an initial $50 billion pension fund, this difference over five years is equivalent to $6.8 billion in foregone income.

In this report, the Maryland Public Policy Institute updates calculations completed two years ago for the fiscal year ending June 30, 2012. The conclusions then are identical to those today—more fees equal lower returns. Neither state pension fund trustees, pension fund executives, nor investment management industry executives contested the findings of the earlier study, which were reasonably publicized.