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Financial Times: UK university pensions suffer from misplaced prudence

A study by Raghavendra Rau, Sir Evelyn de Rothschild Professor of Finance at Cambridge Judge Business School, is featured in the FT article looking at UK university pensions. The study “analyses a portfolio weighted 55 per cent in global equities, 20 per cent in global bonds, 20 per cent in UK bonds and 5 per cent in UK bills from the year 1900.” Professor Rau “compares the USS’s “prudent return” assumption of zero real return over 30 years with the worst realised return of such a portfolio in the last 120 years, which covers two world wars and the great depression,” the article says. “It turns out that the USS’s prudent assumption is far worse even than these disasters.”

Read the full article [ft.com]