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Higher returns on investments and lower management costs: the UN Pension Fund better than peers, according to benchmarking study

22 May 2023

According to a recently released peer review study by CEM Benchmarking, a firm specializing in benchmarking investment funds, the UN Pension Fund outperformed its peers in terms of returns on investments and management costs. The analysis compared the UN Pension Fund's performance to 297 pension funds based in the US (150), Canada (68), Europe (69), Asia-Pacific (6) and other regions (4) during the 2017-2021 period.

The main takeaways of the analysis include:

  • The 5-year net total return of the portfolio was 11.3 per cent, which was higher than the global median of 10.4 per cent and equal to the peer median of 11.3 per cent.
  • The 5-year policy return was 11.2 per cent, which was higher than the global median of 10.1 percent and the peer median of 9.8 per cent.
  • The 5-year net value added, the component of total return from active management, was 0.0%. This was below both the Global median of 0.4% and the peer median of 0.6% as a result of our Fund’s higher policy benchmark.
  • The investment cost of 26.8 basis points was lower than the theoretical benchmark cost of 27.0 basis points and 35 percent lower than the peer median cost of 41.1 basis points.
  • The asset risk of the portfolio was 10.9 per cent, which was above the global median of 9.1 per cent and the asset-liability risk of the portfolio was 12.3 per cent, which was above the global median of 10.1 per cent.

“The benchmarking study demonstrates how cost-effective the Fund’s Office of Investment is in managing the Fund’s assets, and this should be reassuring to our participants, retirees and beneficiaries, and stakeholders at large,” said Mr. Pedro Guazo, Representative of the Secretary-General (RSG) for the investments of the assets of the UNJSPF.

“We will further analyze this peer review to see where we can improve. Actually, some changes are already on the way; for instance, the Fund’s higher asset and asset-liability risks are planned to be decreased based on the 2022 Strategic Asset Allocation implementation. This is a useful tool that we will keep using and disclosing it to our stakeholders every year with updated information,” Mr. Guazo added.

To download the CEM Investment Benchmarking Analysis, click here.

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