Saturday, November 28, 2015

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."

GAWKER, November 11, 2015: 'How Much Hedge Fund Managers Earn for Losing Money' 

Excerpt: "What would you say is a fair amount to pay a savvy, sophisticated hedge fund manager for taking a pile of your money and making it smaller?
Most hedge fund managers are paid both a percentage of the profits they make from investing your money, and a percentage of the total assets that they manage each year. If you are able to quickly grasp the fact that this arrangement enables hedge fund managers to get paid a lot of money each year just for having a lot of money to invest even if they lose money for their investors, then you may “have what it takes” to be a hedge fund manager, or small-time con man, depending upon the circumstances of your birth."

THE NEW YORK TIMES, November 25, 2015: "Calpers Paid $3.4 billion to Private Equity Firms."

Excerpt: "The pension industry, under public scrutiny and faced with ballooning deficits and disappointing performance, is beginning to push for more transparency. For the first time, this year Calpers will pay more money to retirees than it receives from its investments and contributions."

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