Saturday, November 28, 2015

Pension matters: Obfuscation on hedge funds and 'absolute return', November 29, 2015


ˈäbfəˌskāt/, verb
  1. - render obscure, unclear, or unintelligible.

Pension matters update:

The draft Memorandum of Understanding with its potential risks to the system of checks and balances that has kept our Fund healthy for 65 years was placed in the deep freeze by the Under-Secretary-General for Management, Yukio Takasu, this past July and, hopefully, will remain safely on ice. Still, despite consistent and more frequent reporting in the media (see previous post titled 'Pension gaps remain while hedge funds gorge on fees'), it's unclear to what extent the reality of the pitfalls of riskier investments such as hedge funds has been taken on board by the Fund's investment decision-makers, i.e., the RSG, the Investments Committee, the Pension Board, or, for that matter, by the leadership of our UN retiree representative organization, AFICS. 

We're currently wading through the report of the Pension Board Chairman to the Fifth Committee (Nov. 10, 2015), and the Pension Fund's report to the GA (August 14, 2015) posted on the AFICS website (links below). 

The report is posted on the AFICS website with no comment.  We look forward to the day that the AFICS leadership might consider going a step further to provide some brief commentary on the most relevant sections of these, often specialized and technical, reports (206 pages long in this case) for the benefit of its membership.

Pension gaps remain while hedge funds gorge on fees, November 29, 2015

See recent media articles on the pitfalls of alternative investments such as hedge funds (links and excerpts below). The New York Times November 20, 2015 article was delivered on the same day by UN Pension Blog to the office of the Secretary-General's Representative for Investments (head of the Fund's Investment Management Division), with a cover note, for her 'consideration'.

THE NEW YORK TIMES:  November 20, 2015: 'Why Pension and Hedge Funds Don't Mix'

Excerpt: "Rosy promises about hedge fund returns can hurt future retiree pension plans. Year in and year out, public pension managers invest in hedge funds that promise market-beating returns. The stated aim is to narrow the gap between what the pensions have promised future retirees and the money available to meet those obligations. What happens instead is that the pension gaps remain while the hedge funds gorge on fees."