OUTSMARTING PSERS
Last week the Pennsylvania State Employee’s Retirement system, a cousin of PSERS, replaced the Blackrock Alpha Tilt Fund with the Blackrock Equity Index Fund.  The alpha fund tries to beat the return of the S&P 500 and the equity fund simply tries to imitate the S&P’s return.  The alpha fund charges .28%/yr and the equity index fund charges .18%/yr.  Why doesn’t SERS simply invest in a low cost ETF that mimics the S&P without the active management component and corresponding higher fee for .06%?
Let’s pretend it’s your own investment account:  $200,000 invested for 20 years at 6% growth
                                                          Expense Charge %      Annual Fee Amount   20 Year Cost
BlackRock Alpha Tilts Fund                            .28                             $580                   $20,600
BlackRock Equity Index Fund                         .18                             $360                   $13,243
Vanguard S&P 500 ETF (VOO)                       .06                             $120                   $4,414
The Average Individual Investor pays               1.30                            $2600                  $95,426
If you don’t know what you are paying for investment management fees, perhaps it’s time you ask!!!!  Unless, it’s your priority to add to the Wall Street bonus pool!

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