Pension Funds Making Alternative Bets Struggle to Keep Up

But while their fees have soared, their returns have not. In fact, a number of retirement systems that have stuck with more traditional investments in stocks and bonds have performed better in recent years, for a fraction of the fees.

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Heads of pension funds across the country feel trapped. Lower-risk instruments, like 10-year Treasury notes with a yield of around 2 percent, simply will not fill the gaps many systems face between what they have and what they owe retirees.