A Hedge Fund Sales Pitch Casts a Spell on Public Pensions
"This story should come as no surprise to anyone who is, was, or works with the Hedge Fund industry. When the markets have a major sentiment move, either way, it clearly has a profound effect on even the most "market neutral" funds. One only has to look at the Long Term Capital fiasco to witness a supposed "dislocation" strategy that cost investors billions. The article sums up the problem in the following quote: "Whether hedge funds can actually help fill pensions’ coffers is the question responsible trustees must try to answer. Few are financial wizards, so it’s hard for them to truth-squad the sophisticated sales pitch. It has been just over a year since the California Public Employees’ Retirement System said it would wind down its $4 billion portfolio of hedge fund holdings. High costs and complexity made the vehicles “no longer warranted,” Calpers said at the time." One thing Hedge Funders do well is y...