Pension funds are setting the stage to hire more asset managers as four out of five plan to manage more assets in house to save costs and increase oversight, State Street said in a survey released Tuesday night.

State Street pointed to one poll showing external management can be nearly six times as costly for pension funds as doing the work themselves.

However, few funds have the expertise they need to manage all of their assets internally.

“Most will start with 'simpler' asset classes such as domestic equities, but larger and more sophisticated funds may bring in asset classes such as infrastructure, property or private equity,” said the report.

State Street noted infrastructure and real estate are becoming more common places for pension funds to place their money because the long-term nature of these investments matches the decades-long payout requirements of the funds to participants.

Over half of the pension fund executives surveyed worried that external managers interests are too often different from theirs, complaining asset managers don’t "share their pain when things go bad.”

Three-fourths of the pension executives expect their risk appetite to increase in the next three years.

The need for greater returns is being heighted by forecasts showing that U.S. 401(k) pension plans as a whole will have a negative cash flow by 2016 and with cash flows for the broader universe of defined contribution plans going into the minus territory by 2020.

Hedge funds are likely to remain popular alternative investment vehicles for pensions, despite CalPERS decision in September to drastically reduce its exposure, State Street said.

The survey was done of 134 senior pension fund executives around the globe in August.