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Calpers to dump hedge funds

Move to reduce risk

The California Public Employees' Retirement System (Calpers), the largest United States pension fund, is getting rid of hedge funds over the next year, saying they are too complicated and expensive.

Hedge funds are pooled investment funds that bet on a wide range of speculative strategies, including going both long and short on stocks and dipping into unconventional and illiquid investments.

However, hedge funds represent only $4 billion of the nearly $300 billion controlled by Calpers. In the fiscal year that ended June 30, Calpers paid $135 million in fees for hedge-fund investments that earned 7.1 percent, according to Bloomberg News.

That's paying a lot for unimpressive performance.

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The California Public Employees' Retirement System (Calpers), the largest United States pension fund, is getting rid of hedge funds over the next year, saying they are too complicated and expensive.

Hedge funds are pooled investment funds that bet on a wide range of speculative strategies, including going both long and short on stocks and dipping into unconventional and illiquid investments.

However, hedge funds represent only $4 billion of the nearly $300 billion controlled by Calpers. In the fiscal year that ended June 30, Calpers paid $135 million in fees for hedge-fund investments that earned 7.1 percent, according to Bloomberg News.

That's paying a lot for unimpressive performance.

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Comments
9

Let me get this straight...the 300 BILLION DOLLAR CalPERS pension system is getting out of its hedge fund investment because they cost too much and provided less than stellar returns.

The 10 Billion dollar San Diego County pension system is going ALL IN with its hedge fund schemes ...

Just wondering how this is going to turn out?

Sept. 16, 2014

JustWondering: Calpers made a wise decision. The county's pension fund has made an unwise decision. Hedge funds, private equity, derivatives -- all do not belong in a portfolio for people of average means. Hedge funds have not been performing well and take far too much of the investors' money; private equity is a scam; derivatives almost destroyed the world economic system. 'Nuf said. Best, Don Bauder

Sept. 17, 2014

I am tempted to make a prediction: fees will skyrocket for SD County, and then the market will bleed out. Then people will complain.

Sept. 16, 2014

eastlaker: You can make a bet: by the time San Diego Countians realize they have been had, it will be too late. Best, Don Bauder

Sept. 17, 2014

Apparently, no one remembers 2006, 2007 and 2008 when "riskless" positions became illiquid. Risk can be controlled; risk can be mitigated, but increasing risk to decrease risk is the same as lifting oneself with ones own suspenders.

Sept. 17, 2014

exkidder: It is astounding to me that people have already forgotten what the recondite instruments did to the world economies in the 2008-2009 period. The U.S. spent $14 trillion in both fiscal and monetary policy trying to save the system -- and here we are again, using the same kinds of instruments. And it's the same bandits peddling them. Best, Don Bauder

Sept. 17, 2014

Dan Butler: Yes, good for Calpers. But San Diego County? Best, Don Bauder

Sept. 17, 2014

I read in some other paper that CALPERS' hedge funds charged fees of 2% --which is a lot of money. Good they are getting out.

Sept. 17, 2014

monaghan: Hedge funds charge 2 percent or so -- it may vary -- but it also takes 20 percent of your profits from the fund. Best, Don Bauder

Sept. 17, 2014

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