Picking above-average managers delivers superior returns. Thank you Mercer! [The Skeptic's Guide to Investment Management #4]

About this episode

The episode critiques a Mercer report on private investments and their assumed superior performance, highlighting potential conflicts of interest and fiduciary responsibilities.

Welcome to the Skeptic’s Guide to Investment Management. In each episode, we examine one industry publication through a skeptical, logical, evidence-based lens, with the help of Tim McGlinn , ex-investment consultant, portfolio manager and professor of finance, and founder of the TheAltView. We discuss a 2025 Mercer report claiming that adding a 20% allocation to private investments (venture capital, private equity, real estate, etc.) could boost target-date fund expected returns by 1% (7.1% vs. 6.1%). The catch: Mercer assumes public markets earn plain market returns, while private assets magically get “above-average manager” performance forever—because everyone’s an above-average driver. Tim also highlights Mercer’s conflict of interest as a consultant that sponsors private equity funds, plus ERISA’s heavy fiduciary burden on employers, making glossy sales pitches even more problematic. Key takeaway: we’re not all above average drivers or fund pickers. Link to Tim’s original article: TheAltView SGIM is an Investology podcast series, produced by Orama: https://orama.tv/ More content like this on Substack and YouTube: YouTube: https://www.youtube.com/@investology_podcast…

People in this episode

Host: George Aliferis

Guest: Tim McGlinn

Topics covered

• investment management
• private investments
• performance evaluation
• fiduciary responsibility
• conflict of interest

Keywords

• Mercer report
• private equity
• venture capital
• target-date funds
• investment performance
• fiduciary duty
• above-average managers

Mentioned in this episode

Organizations: Mercer, TheAltView, Orama, Investology

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