BUSINESS NEWS - A few years back, The Wall Street Journal profiled Steve Edmundson, the investment manager for Nevada’s $35 billion public retirement fund.
The headline was: “What Does Nevada’s Fund Manager Do All Day? Nothing.”
Here’s how the article opened:
Steve Edmundson has no co-workers, rarely takes meetings, and often eats leftovers at his desk.
With that dynamic workday, the investment chief for the Nevada Public Employees’ Retirement System is out-earning pension funds that have hundreds on staff.
His daily trading strategy: Do as little as possible — usually nothing.
Mr. Edmundson, 44 years old, is an outlier when it comes to managing retirement money.
Retirement funds are huge — and because they generate fees at scale, there’s often pressure to hire impressive-looking asset managers, who then justify their value with complicated strategies. In theory, it sounds sophisticated. In practice, it usually doesn’t work.
The point of the Journal article was simple: complexity rarely beats simplicity.
When Edmundson became CIO in 2012, he fired ten external managers. By 2015, 100% of the portfolio was in low-cost index funds. He made, at most, one portfolio change per year.
And the result? Better performance than many of the more “sophisticated” funds with large teams and expensive strategies.
His philosophy: Keep costs low. Don’t try to beat the market.
It’s easy to fall into the trap of showcasing expertise through complexity — thematic strategies, structured products with clever names, geographic overlays, and high upfront fees.
I recently saw a structured product with a 4% upfront charge, and it reminded me of the unregulated commission structures of the 1990s — the kind that created a generation of underperformance and broken trust.
So what’s driving this wave of complexity?
In many cases, the more complicated the strategy, the easier it becomes to justify higher fees — even if the actual outcome for the investor is no better (and often worse).
Structured products and layered strategies create the appearance of protection or sophistication, but what most people actually need is a broad index that gives exposure to the whole market at low cost as the foundation of the portfolio — and then the discipline to stay invested.
Often, the more layers you add, the more you end up with a portfolio that’s just a complicated, expensive version of an index.
Have a look at the chart below showing asset class performance by geography going back 20 years.
The assumption here is that you simply choose a country, and buy an index that gives you the return of that countries stock market.
Even if you’d put 100% of your portfolio into the worst performing geography (Japan, in this case), you’d still have achieved an annualised return of 8.85% over 20 years. That’s nothing to scoff at — and remember, that’s capital growth, not taxable unless sold.
Over the past 20 years, the S&P 500 generated an annualised rate of 14.95% per year, and the JSE generated an annualised rate of 13.4% per year.
Do you still want complexity? I've said it before - market returns are good enough
While others were chasing complex strategies and higher cost alternatives, Edmundson simply bought low-cost index funds — mostly the S&P 500 — and left them alone. Over time, he outperformed most of his peers. Not by being clever, but by being consistent.
Take April, for example. Markets dropped sharply on tariff fears, then bounced back just as fast. Those who panicked or tried to outsmart the headlines likely missed the recovery.
I’ve heard from 2 people now who sold out after that 2 day 10% drop in markets. That’s tough. They missed the bounce.
As always, the right move was to do nothing. Hold quality companies. Ignore the noise. Stay invested. Sometimes, less really is more.
Matthew Matthee has a wealth management business that specialises in retirement planning and investments. He writes about financial markets, investments, and investor psychology. He holds a Masters Degree in Economics from Stellenbosch University and a Post Graduate Diploma in Financial Planning from UFS. MatthewM@gravitonwm.com
‘We bring you the latest Garden Route, Hessequa, Karoo news’
