Archive for the ‘Politics’ Category

Who to Believe on Hedge Funds – Part 2

The American Legislative Exchange Council (ALEC) earlier this year came out with an estimate of $5.6 trillion as the the total of the unfunded liabilities in state pension plans and now they have come out with a report laying part of the blame for the shortfall on politically motivated bad investments and, as it turns out, New Jersey tops another list:

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Who to Believe on Hedge Funds

Either Guy Haselmann, who has been a member of the New Jersey State Investment Council which oversees investments of the state’s pension funds since 2010, came out with an opinion piece defending hedge funds saying:

Numerous inaccurate stories and statements have also been made about hedge funds and the role they should play in the pension portfolio. [Our presumptive next governor Phil] Murphy said that “the State Investment Council paid $270 million in fees to hedge fund managers — $142 million of which was paid without regards to returns.” This statement is misleading as an absolute dollar amount of fees paid is a meaningless number.  For example, anyone should be willing to pay $100 million, if they received $1 billion in return.  It is net returns that matter and which have informational value.

Murphy also incorrectly said that “the Hedge Fund program lost 13 percent.” The fact is that in fiscal year 2015, the hedge fund program returned 4.21 percent and generated nearly $390 million of net profits, after all fees were paid. The hedge fund program’s return was higher than many other segments of the portfolio, including the fixed income and international equity investments.

With stock and bond prices hitting all-time highs in 2016, finding hedge funds, or other types of exposures, that offer diversification, has never been more important to the portfolio. As a case in point, the S&P 500 return in 2008 was negative 37 percent, while the return of the HFRI Macro Hedge Fund Index was greater than 5 percent during the same period.

Overall, hedge fund investments have served the state pension plan well over a long period of time, offering meaningful diversification, and better total returns with less risk.

The pension plan’s large underfunded status means that it is vital to avoid significant losses.  Hedge funds can provide a type of exposure that improves the risk versus reward characteristics of the overall portfolio. Demonizing hedge funds without full understanding of the construction of the entire portfolio is detrimental to all beneficiaries.

Or Pensions & Investments:

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Christie’s New Job

Even before the latest S&P debt downgrade (with Fitch and Moody’s likely to follow any day) it was clear that Chris Christie had virtually checked out of his job as New Jersey governor.  A Trump win allows his body to rejoin full-time his heart and mind.  The question is where?

With Christie dropped as head of the transition team and a move away from business-as-usual governance at this point what type of position is Chris Christie slotted for in a Trump administration? Because we know he’s going to take whatever is offered?

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Getting Over Cohen…..and Clinton

Simultaneous to Donald Trump being elected president Leonard Cohen died.

I must have been around sixteen when I got those first three Leonard Cohen albums from the bargain bin at Two Guys for a dollar each and only yesterday I downloaded his last set of songs so this SNL tribute was quite moving…

But as a 9/11-style elegy to a Hillary Clinton presidency?  Not so much.
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Trump Rage

This was supposed to be a blog about how the Trump presidency will handle the pension crisis in this country but after much googling I found nothing out there…..which is what voters should really be mad about.

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Clinton-GRAP: The Flaws

With Hillary Clinton losing the Guaranteed Retirement Account Proposal (GRAP) likely went down with her.

Here is why that’s a good thing…

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Clinton-GRAP: The Proposal

Not as catchy as Obama-Care but when the Clinton people, specifically Teresa Ghilarducci, remake the retirement system in this county it will be based on the Guaranteed Retirement Account Proposal which has had a number if incarnations over the years:

The most recent version which could become reality next year has these primary features (as excerpted):

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