Pensions and Retirement Training Course on Passive vs Active Pension Fund Management

Module 1: Overview of Active and Passive Investment Management
Evolution of active and passive investing in institutional portfolios
Defining key concepts: alpha, beta, tracking error, and information ratio
Understanding the Efficient Market Hypothesis (EMH) and its implications
Role of passive and active strategies in pension fund investment objectives
Global trends: Shift from active to passive management
Case study: Pension funds transitioning to passive mandates

Module 2: Active Investment Strategies for Pension Funds
Fundamental vs. quantitative active management approaches
Stock selection, sector rotation, and tactical asset allocation
Role of skilled fund managers and alpha generation sources
Measuring active risk and evaluating manager performance
Costs, fees, and transparency considerations
Workshop: Evaluating the performance of an actively managed pension portfolio

Module 3: Passive Investment Strategies and Index Tracking
Concept and rationale behind index-based investing
Types of indices: market-cap weighted, equal-weighted, and factor-based
ETFs and index funds in pension portfolios
Advantages of passive investing: cost efficiency, transparency, predictability
Risks of passive investing: tracking error, concentration, and market volatility
Practical session: Constructing a passive portfolio for a defined benefit fund

Module 4: Comparative Analysis and Hybrid Approaches
Cost-benefit and performance comparison: active vs. passive
Identifying when active management adds value
Core-satellite and barbell strategies for pension funds
Integrating ESG and sustainability considerations in both approaches
Selecting and monitoring external managers
Simulation: Designing a blended active-passive investment structure

Module 5: Governance, Oversight, and Strategic Decision-Making
Governance implications for different management styles
Oversight mechanisms and performance reporting standards
Trustee decision frameworks for selecting active or passive mandates
Fiduciary responsibilities and accountability in investment choices
Communicating strategy and performance to stakeholders
Capstone exercise: Developing a governance framework for active-passive management in a pension funds