A Look Under the Hood

In this episode of "The Memo by Howard Marks," Marks reflects on his experience providing feedback to a U.S. state pension fund's board and senior staff regarding a consultant's survey. He shares the consultant's approach to assessing the board's attitude toward risk using a two-by-two matrix based on the plan's ability and willingness to bear risk, and discusses the board's objectives, particularly their focus on achieving actuarial assumptions over peer performance. Marks also delves into the complexities of assessing investment performance, advocating for a balanced approach that considers both short-term relative benchmarks and long-term goals, while also addressing the role and perception of volatility in investment decisions.