Posts filed under “Hedge Funds”
This was the big news yesterday out of California:
The California Public Employees’ Retirement System (Calpers) today announced that it will eliminate its hedge fund program, known internally as the Absolute Return Strategies (ARS) program, as part of an ongoing effort to reduce complexity and costs in its investment program.
The staff recommendation, supported by the Investment Committee, will exit 24 hedge funds and six hedge fund-of-funds valued at approximately $4 billion.
Though this move may shock some people, it was one of the most-telegraphed actions that the nation’s biggest pension fund has made. The seeds for this were planted last year, when Calpers moved the authority over hedge funds from its equity desk to its fixed-income group. Bond investors look at the world very differently from equity investors.
The criticism of hedge funds from the equity side of the investing universe typically focuses on performance and fees, to a lesser extent. Charging high fees — hedge funds typically collect fees equal to 2 percent of the assets under management plus 20 percent of any gains — is a pretty big drag on long-term performance. However, a handful of funds have managed to accomplish high returns over long periods of time. That is the promise of alternative investments. The reality is much different, as the industry as a whole and most of its components underperforms the broader market. Not surprisingly, paying high fees for a lack of performance has become a difficult investment practice to defend.
But that is the equity view. From the fixed-income side of things, the focus is on a risk-reward analysis . . .
This week’s Masters in Business Radio show is on at 10:00 am and 6:00 pm on Bloomberg Radio 1130AM and Siriux XM 119. Our guest is famed short seller and hedge fund manager Jim Chanos. You can listen to live here. All of the past Podcasts are here and at Soundcloud and coming soon to…Read More
Slipping back into my regular routine is sometimes a challenge after a few days of traveling. The first day back in the markets — especially following a week like we had to end July and begin August — can be a bit of an adjustment. A few days away allows the accumulation of jaded skepticism…Read More
During the past few months, we have posted a few words here on the quandary that is hedge funds. One such effort was titled “The Hedge-Fund Manager Dilemma,” and it explored the public’s fascination with the hedge-fund crowd. The next, “Why Investors Love Hedge Funds,” looked at why, despite stunning underperformance during the past decade,…Read More
click for larger chart Source: Pension Partners Hedge-fund assets recently eclipsed $3 trillion. One of the more popular strategies for hedge funds has been the long/short equity fund. Charlie Bilello, director of research at Pension Partners and the source of our chart today, writes: Continues here
Last summer in Boston, the Trustee Leadership Forum for Retirement Security held its annual meeting at Harvard’s Kennedy School. Trustees and representatives of various state pension funds listened to explanations about the challenges facing endowments and pension funds. The conference is an attempt to explain why so many state pensions are underfunded and underperforming. The…Read More
Take Apart: Overall, it’s a swing in the financial fortune of one of the country’s top private universities and one of the world’s most esteemed Jewish institutions of more than $1.3 billion, well more than 10 times the losses from the portion of Yeshiva’s portfolio invested with Madoff. Students who applied to and enrolled at…Read More
In yesterday’s column, I wrote: If you have an issue with Social Security, then fix it. The regressive taxes to fund retirement benefits top out at about $117,000 in 2014. Why not simply raise that to $250,000 next year and $500,000 during the next 20 years. Congratulations, you just made Social Security solvent for the…Read More