Fall 2025

Global Pension Insights

In this issue:

• 2024 investment data shows early signs of recovery, though net value added remains negative for a second year—examine what’s driving the numbers and where relief has appeared.

• A new blog explores the internal rate of return (IRR), its limits as a performance metric, and why it should be viewed alongside other measures.

• We examine how benchmark design shapes investment outcomes, drawing on 30 years of CEM data to outline three distinct approaches.

Letter from the CEO

After a difficult 2023, institutional investors hoped for improved performance in 2024. It was better, but was it enough? 

As my kids would say, “we have the receipts”. Let’s look at 2024 performance amongst investment divisions and then administration teams.

We have received and cleaned ~85% of US$15 trillion in investment data we expect to receive for 2024. It’s a strong, representative sample across both regions and fund types, and that means we’re in a good place to start drawing early insights.

So, what is the data telling us so far? At an aggregate level, net value added (“NVA”)* was negative for the second consecutive year. The average NVA generated by funds spanning North America, Europe and AMEA in 2024 was -60 bps. This was ~80 bps improvement from 2023 (i.e.,-140 bps), but well under the 33-year average of 16 bps.  2024 was the first time since the Global Finance Crisis (i.e., 2008 and 2009) that NVA was negative for a second consecutive year. 

What made 2024 so challenging? Two asset classes in particular. 

1. Private equity continued to weigh down NVA. The downward pull was more dramatic using funds’ self-reported benchmarking than the more correlated, lagged default CEM private equity benchmark. I will note, though, that private equity has still delivered ~100 bps of NVA on average over the past five years. 
2. Real Estate also had negative NVA, though less dramatic than PE.  The order of magnitude is connected to investment style (e.g., direct, fund) and sub-sector (e.g., retail, commercial).   

Which asset classes provided relief?  Most notably, Fixed Income – public and private, short and long term – and Infrastructure. Both asset classes have delivered steady and, mostly, positive NVA over the past decade, with 2024 being particularly positive. 

If you are interested in insights at a deeper – e.g., at a strategy or mandate level – please connect with us directly.  We are expecting to surpass, for 2024, data on 14,000 individual mandates spanning more than 500 strategies.  We would be happy to explore your areas of particular interest.  

When we ladder up the asset class insights, we develop cross-regional insights.

The performance of large U.S. public pension funds, relatively heavier allocators to PE, have pulled ahead of funds in Canada, Europe and the U.S. Corporate sector.  When risk via, for example, Sharpe ratios, enters the mix, the large Canadian funds continue to outperform.  

For Pension Administration, the ten-year view once again tells the most meaningful story. We are seeing:  

• 69% of plans have reduced their cost per member, with an average annual decrease of 0.5%.  

• 92% of plans have improved their service score, with an average annual increase of 1.7% (based on the last eight years).  

• In 2024, the median plan engaged 75% of its members through its secure self-service website.  

Before closing this letter, I would like to share:

• Our data policy, referred to in our last issue of Peer Intelligence, is now available on our website here. 
• A new blog which takes a closer look at IRR—its limitations, and why a more balanced approach to performance measurement matters.
• Published recently in CIO, this article looks at how benchmark design influences investment outcomes.

Thanks, as always, for reading.

Rashay Jethalal

CEO, CEM Benchmarking

* Reminder:  NVA = Gross return less all expenses (direct and allocated) less the benchmark return.  All results are versus self-reported benchmarks. 

The IRR Mirage: Moving Beyond Single-Metric Storytelling in Private Markets 

By Andrew Kaufman, Senior Research Associate

Inside the IRR Metric:

In this blog, we examine the concept of the internal rate of return (IRR) and its limitations as a performance measure, using Saudi Arabia’s $500 billion NEOM project as an illustrative example. The discussion explores how IRR can be manipulated to present overly optimistic outcomes and highlights the importance of interpreting it alongside complementary metrics to form a more accurate and transparent view of investment performance.

Why Benchmark Choice May Be the Most Strategic Investment Decision

Andrew Kaufman, Senior Research Associate

Chris Doll, Co-head of Client Coverage