Policy with Purpose: Lessons from Leading Public Funds

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Policy with Purpose: Lessons from Leading Public Funds

Policy with Purpose: Lessons from Leading Public Funds

Insights from Aon’s research into the governance practices of leading U.S. public funds

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In an increasingly complex investment environment, strong governance starts with clear policy. Aon’s study of the investment policy statements (IPS) of the 50 largest U.S. public pension funds to examine how leading asset owners are structuring policy to balance discipline, flexibility, and fiduciary responsibility. The research highlights common practices, emerging trends, and areas where clarity and delegation can enhance oversight and support long term decision making.

Key takeaways
  1. Clear policy design is foundational to sound governance
    A well structured investment policy provides more than documentation—it establishes roles, decision rights, risk controls, and a framework for implementation. Aon’s analysis shows that clarity in asset allocation ranges, benchmarks, and delegation helps boards remain focused on strategy while supporting efficient execution.
  2. Delegation is widely used—but approaches vary
    Public funds are roughly evenly split between those that retain manager selection authority and those that delegate it to staff. When thoughtfully defined, delegation can improve efficiency, leverage specialized expertise, and allow boards to concentrate on strategic oversight rather than day to day implementation.
  3. Flexibility is increasing, but guardrails matter
    As portfolios grow more complex—spanning public and private markets—policies are evolving to allow flexibility across asset classes and liquidity profiles. Multi layer asset allocation ranges and clearly defined rebalancing policies are increasingly important tools for managing total portfolio risk.

Drawing on our study of the 50 largest U.S. public pension funds, Aon brings data driven insight into how investment policy design, delegation, and clarity shape effective governance across complex portfolios.

As public funds navigate evolving markets, expanding opportunity sets, and heightened governance expectations, investment policy remains a critical lever for resilience and accountability. Aon’s research offers practical insights into how leading funds are structuring policy to support effective oversight and informed decision making.

If you would like to discuss how these investment policy and governance considerations may apply to your organization, please contact our team for additional perspectives and insights on evolving practices across public funds.

91%

Of public funds clearly outline roles and responsibilities in their IPS, reinforcing policy’s role in governance clarity.

Report

Policy with Purpose: Lessons from Leading Public Funds

Insights from Aon’s research into the governance practices of leading U.S. public funds.

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Source: Aon study of Investment Policy Statements of the 50 largest U.S. public pension funds. Data is only for public funds with Investment Policy Statements available online or through information requests to the fund. The study only used publicly available data. Data as of 8/2025.

Disclaimer

Investment advice and consulting services provided by Aon Investments USA Inc. (“AIUSA”). The information contained herein is given as of the date hereof and does not purport to give information as of any other date. The delivery at any time shall not, under any circumstances, create any implication that there has been a change in the information set forth herein since the date hereof or any obligation to update or provide amendments hereto.

The opinions referenced are as of the date of publication and are subject to change due to changes in the market or economic conditions and may not necessarily come to pass. Information contained herein is for informational purposes only and should not be considered investment advice.

This document is not intended to provide, and shall not be relied upon for, accounting, legal or tax advice or investment recommendations. Any accounting, legal, or taxation position described in this presentation is a general statement and shall only be used as a guide. It does not constitute accounting, legal, and tax advice and is based on AIUSA’s understanding of current laws and interpretation.

This document is intended for general information purposes only and should not be construed as advice or opinions on any specific facts or circumstances. The comments in this summary are based upon AIUSA’s preliminary analysis of publicly available information. The content of this document is made available on an “as is” basis, without warranty of any kind. AIUSA disclaims any legal liability to any person or organization for loss or damage caused by or resulting from any reliance placed on that content. AIUSA. reserves all rights to the content of this document. No part of this document may be reproduced, stored, or transmitted by any means without the express written consent of AIUSA.

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