In your experience is the risk of the real money managers unconstrained? It seems odd these guys have to hit these rates of return, no matter what.
This same type of behavioral nuance comes up when looking at low vol strategies: empirically, low vol outperforms per unit of risk than high vol due to managers seeking high rates of return in combination with being unable to leverage.
Yes, the returns are set due to actuarial liabilities to repay the pensioners. Only other option is to hugely increase premiums for current workers & most of these funds are already hugely underfunded.
As they follow Swensen's endowment approach risk theoretically diminishes as they "diversify".
I go over the logic of this here, many seem to miss it: https://medium.com/@emad/asset-allocation-not-share-prices-w...
(my background: hedge fund manager/strategist with clients like those mentioned in article)