Economists warn investment ‘groupthink’ could hurt pension outcomes
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Diversifying investment risks could increase the chances of pension funds all having to cut benefits at the same time, Dutch economists have argued.
Writing for the journal Economische Statistische Berichten (ESB), Dirk Broeders and Rob Bauer - economics professors at Maastricht University - warned that pension funds hiring the same actuarial advisers and asset managers often made the same strategic investment choices.
Their research showed that this herd behaviour in particular applied to alternative asset classes such as commodities, private equity, hedge funds and real estate.