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   CARSON CITY, Nev. — The Carson Nugget casino takes up the better part of a downtown block in this state capital, and a sign on the side beckons bettors with a promise of “Extremely Loose Slots.” 
   
   You won’t find the state’s chief investment officer, Steve Edmundson, anywhere near there. Instead, he manages its pension funds on the outskirts of town, in a sparsely furnished office next to a bank branch. Less than half a shelf of books sit on display, including “The Hedge Fund Mirage.” One binder is labeled “Terminated Managers.” 
   
   Those items offer hints of the surprising professional journey that Mr. Edmundson and his predecessor, Ken Lambert, who still serves as a consultant to the state, have recently completed. Since the beginning of 2014, they have moved the last of the state pension funds’ stock and bond investments entirely into securities that track market indexes exactly. So here, in the state that brought us gambling as an everyday activity, the two professionals who gauge investment odds have taken their money off one particularly large table, deciding that it no longer makes sense to bet on Wall Street wizards to beat the market. Few if any managers of large pension funds have ever done such a thing. 
   
   The knock on index funds and similar strategies has always been that the smart money knew better. Endowments, foundation money, pension funds — their managers had the wisdom and connections to find investments that outperform the market, or investors with the magic touch. The fact that they could supposedly do it (though they often couldn’t) seemed to serve as a sort of challenge to individual investors, who took up trading as a hobby and bought and sold their way to unfortunate losses. 
   
   Mr. Lambert grew up thinking he might be savvy enough to beat the market for a living. As a boy, he used the proceeds from the sale of a calf to buy shares in Macy’s, where his father worked as a manager at various stores in the West. The stock ended up increasing more than twentyfold before he sold, and he was hooked on the markets. He was chief investment officer of Nevada’s pension funds for seven years before turning the job over to Mr. Edmundson. 
   
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   Mr. Edmundson worked at Oracle earlier in his career, in the group handling the employee stock option and purchase plans. He had a front-row seat for the tech bubble in 2000 — and the popping, too. By the time he went to work for the state, the pension funds were already moving bit by bit away from trying to beat the market and more toward indexing, where the funds would own every security in a particular market segment. 
   
   According to Mr. Lambert, the more voluble of the pair, a pension fund manager (and an individual investor) has to begin any strategic analysis with the acknowledgment that most investors who try to pick stocks or bonds that will outperform their market segment will fail to do so over long periods. “So you have to trade active managers,” he said. “Not only do you have to believe that they can beat the market, but you must spend time hiring and firing them.” 
   
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   By ceasing to place outsize bets on companies, industries or countries, the men also eliminate the temptation to focus too much on the short term. This is especially crucial for government pension fund managers, because new people in their 20s are constantly entering the plan and may be drawing on it 75 years later. “If we are freaking out about what is happening tomorrow or what happened last quarter, then we’re not doing our jobs,” Mr. Edmundson said. 
   
   Then there are the fees that outside money managers charge pension funds. While pension fund managers pay much less than the 1 percent or so of assets that an individual might pay for an actively managed mutual fund, every basis point (which is the term Wall Streeters use for one one-hundredth of a percent) matters. 
   
   Mr. Edmundson and Mr. Lambert, who are both 43 and consider themselves equal partners, manage about $35 billion. One basis point for them is $3.5 million, which covers a lot of monthly pension checks. Their most recent investment moves, they said, will save $4 million in fees each year, which compounds over time. No one at the three firms they cut loose would talk to me about whether they thought the pair had made a mistake. 
   
   The men say they believe that their overall annual costs to run the funds (which also include a smattering of more expensive real estate and private equity investments) are about half a percentage point less than their peers, on average. Over the last decade, as the funds have made the transition toward indexed investments in stocks and bonds, the total return for the biggest fund has bested 73 percent of its peers, according to data from their consultants at Callan Associates. 
   
   A word about those peers. Earlier this year, the New York City comptroller issued a report concluding that nearly all of the outperformance it achieved in investments like the ones that Nevada now indexes went into the pockets of the outside managers who achieved them, in the form of fees. The California Public Employees’ Retirement System (known as Calpers) is strikingly paring its own use of expensive gurus for hire. 
   
   Calpers’s public statement on “active” stock and bond picking versus index investing, however, is decidedly muddled. “Calpers will use index tracking strategies where we lack conviction or demonstrable evidence that we can add value through active management,” it states in the“Beliefs” document it adopted in 2014. Whose conviction? How much table-pounding is required? And how can you acquire demonstrable evidence of how a particular investing strategy will perform going forward? 
   
   The fact is that most professionals with outsize conviction — and most of us — won’t get it right often enough to beat the index funds over the half-century or more that we might be investors. So Mr. Edmundson and Mr. Lambert, whose moves were first reported in the trade publication Pensions & Investments, have put 42 percent of public employee money to work tracking the S&P; 500 index of large United States companies, another 18 percent toward a basket of international stocks and 30 percent toward United States Treasury bonds. And that’s it (save for its bit of private equity and real estate), though they will sometimes adjust the percentages. 
   
   Your appetite for risk and need for higher or lower returns may dictate a different allocation, but it need not be much more complicated. Then, you must have the conviction to stick with the plan, avoiding the tendency that too many of us have to buy more when our investments have already increased plenty and lock in losses by selling when markets are low. 
   
   On days like Thursday and Friday, when the stock market is declining, it’s hard to sit calmly and do nothing, especially when commentators are yelling on television. So when the two men are feeling itchy, they make for the hills, literally, running on trails near Reno for 10 or 15 miles at a time. 
   
   They can’t trade while they are in motion, but that’s probably a good thing. “We spend a lot of time up there talking each other out of stuff,” Mr. Lambert said. “In investing, the answer 90 percent of the time is to do nothing.” ||||| 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. 
   
   The Nevada system’s...
target: – If your visions of high-profile hedge fund managers include frenetic scrambling through paperwork, fielding endless phone calls, and scouring the Internet during never-ending workdays, those don't apply to Steve Edmundson, the investment head of Nevada's $35 billion Public Employees' Retirement System, the Wall Street Journal notes. Where other states' retirement systems try to come up with the most complex investments possible to beat the markets, the 44-year-old Edmundson has a different philosophy when it comes to day-to-day trading: "Do as little as possible, usually nothing," as the Journal puts it. And by "nothing," that means not obsessing over the daily fluctuations in oil prices, the elections, or even what Janet Yellen is up to—an approach that's rare among managers of large pension funds, the New York Times noted last year in an article about Edmundson. This laissez-faire tactic has served Edmundson well: His system's returns over anywhere from one to 10 years are competitive, if not better, than the pension systems of other states, including the largest public one—California's. Even Edmundson's desk looks like it's his first day on the job, with just basic office supplies, a few family pics, and a printer—no fancy Bloomberg Terminal to monitor real-time market info. Edmundson is able to kick back by keeping the system's stocks and bonds in low-cost index funds, though one investment strategy expert (who held the job before Edmundson) concedes "doing nothing is harder than it looks" when it comes to showing such restraint. Edmundson's minimalist philosophy even carries over to lunch: He brings leftovers or a sandwich from home so he doesn't have to spend $10 each day. (A typical Steve Edmundson day, in the Wall Street Journal.)