- Title Pages
- Preface
- Managing Pension and Retirement Plans
- 1 An Introduction to Pension Plans
- 2 What Pension Plans Do
- 3 Designing the Best Pension Plan
- 4 The Prudent Pension Fiduciary: A Pragmatic View
- 5 An Overview of Compliance for Pension Plans
- 6 Establishing Pension Investment Policy
- 7 The Asset Allocation Decision
- 8 The Integrated Approach to Managing Defined Benefit Plans
- 9 Asset Allocation for Defined Benefit Plans
- 10 Accounting for Defined Benefit Plans
- 11 Investment Policy and Asset Allocation for Defined Contribution Plans
- 12 Employee Stock Ownership Plans and Company Stock
- 13 Hybrid Plans
- 14 Evaluating Investment Performance
- 15 Improving Pension Fund Investment Performance
- 16 Managing Pension Fund Risk
- 17 Risk Management Strategies Using Derivative Securities
- 18 Selecting and Managing Asset Managers
- 19 Managing Costs
- 20 People and the Psychology of Pension Fund Decisions
- 21 The Pension Plan as Shareholder
- 22 The Path to Better Pension Plan Management
- Appendix A A Guide for the Prudent Fiduciary
- Appendix B Global Investing for Pension Funds
- Appendix C An Example of a Multiemployer Hybrid Pension Plan
- Appendix D Measuring Returns
- Appendix E Adjusting for Risk
- Appendix F Example of an Equity Swap Hedge
- Appendix G Manager Selection
- Works Cited
- Index
Managing Costs
Managing Costs
- Chapter:
- (p.248) 19 Managing Costs
- Source:
- Managing Pension and Retirement Plans
- Author(s):
August Baker
Dennis E. Logue
Jack S. Rader
- Publisher:
- Oxford University Press
The effective management of a pension plan requires managing the costs of asset management. This means understanding and controlling investment costs such as the costs of trading, custody, and so forth. Transaction costs erode portfolio value. Thus, a trade must be motivated by an investment idea that adds more value than is destroyed or by a constraint such as liquidity that overrides the cost of the trade. Pension boards and senior management must understand the costs incurred in trading and how they may be controlled to ensure that more value is added than destroyed.
Keywords: pension plans, asset management, cost control, transaction costs
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- Title Pages
- Preface
- Managing Pension and Retirement Plans
- 1 An Introduction to Pension Plans
- 2 What Pension Plans Do
- 3 Designing the Best Pension Plan
- 4 The Prudent Pension Fiduciary: A Pragmatic View
- 5 An Overview of Compliance for Pension Plans
- 6 Establishing Pension Investment Policy
- 7 The Asset Allocation Decision
- 8 The Integrated Approach to Managing Defined Benefit Plans
- 9 Asset Allocation for Defined Benefit Plans
- 10 Accounting for Defined Benefit Plans
- 11 Investment Policy and Asset Allocation for Defined Contribution Plans
- 12 Employee Stock Ownership Plans and Company Stock
- 13 Hybrid Plans
- 14 Evaluating Investment Performance
- 15 Improving Pension Fund Investment Performance
- 16 Managing Pension Fund Risk
- 17 Risk Management Strategies Using Derivative Securities
- 18 Selecting and Managing Asset Managers
- 19 Managing Costs
- 20 People and the Psychology of Pension Fund Decisions
- 21 The Pension Plan as Shareholder
- 22 The Path to Better Pension Plan Management
- Appendix A A Guide for the Prudent Fiduciary
- Appendix B Global Investing for Pension Funds
- Appendix C An Example of a Multiemployer Hybrid Pension Plan
- Appendix D Measuring Returns
- Appendix E Adjusting for Risk
- Appendix F Example of an Equity Swap Hedge
- Appendix G Manager Selection
- Works Cited
- Index
