Sample Analysis

Our reports provide you with a comprehensive, rigorous analysis.  Some of the key measures we look at are:  

 

  • Policy mix
  • Value added
  • Cost comparisons
  • Risk

Policy Mix and Value Added

How did the impact of your policy mix compare to other funds?

The biggest driver of total return is your policy mix. Our analysis compares your policy mix to your peers and the universe and describes in detail how differences have impacted your relative performance.

 

How did your total value added from active management compare to other funds?

Value added is the value created by active management. It equals your actual return minus your policy return. Our analysis compares your total value added to your peers and the universe.  
 


In which asset classes did you add the most value and how did it compare to other funds?  
 Our analysis compares your value added at both the total fund and asset class levels.  It also breaks down the value added into asset mix decisions and “in-category” decisions (stock selection decisions within each asset class).
 
 

Cost Comparisons

Are you paying more or less than your peers?
 Detailed cost comparisons show you where you are paying more or less than your peers. Costs are compared at the total fund level (including investment management and other cost such as oversight and custodial fees) and at the asset class level.  These graphs show two examples of the over 50 line-item comparisons provided in the report.
 

 
How are differences in implementation style impacting your costs?
The report compares your implementation style (i.e., internal versus external, active versus passive) to your peers and shows how differences impact your costs in total and at the asset class level.
 

 
Cost effectiveness:  Did paying more get you more?   
 Our analysis compares your cost and net valued added to your peers and our universe.
 

 

 

Risk

CEM measures and compares three types of risk:


Asset-liability risk:  This is the expected standard deviation of funded status caused by market factors.  It is a function of your asset risk, the volatility of your marked-to-market liabilities and the correlation between the two.  Asset-liability risk is the biggest risk that pension funds incur.


Asset risk:  This is the expected volatility of your policy return.


Tracking error:  This is the risk of active management and equals the volatility of your annual net value added.