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0 pointsblacksqr4y ago0 comments

The unstated assumption in the above paragraph is that net returns from hedge funds, accounting for losses from blowups, are still high enough to warrant pension funds investing in them. But experience shows that's not the case, e.g.:

"I know in the long term private equity is supposed to give us very healthy returns, but that of course has not been the case for quite some time,” said Sung Won Sohn at Tuesday’s board meeting. “It’s been anything but healthy returns…"

https://www.nakedcapitalism.com/2021/04/lacers-board-member-...

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jaredeklee134y ago

Can't argue with the data - agreed on the average. Not to say there aren't brilliant fund managers and pensions that are able to identify them.

But how does it follow that regulations should restrict a pension's choices?

blacksqrOP4y ago

I'm not advocating any particular policy. I'm still trying to perceive any chain of logic that leads to the conclusion that hedge funds blowing up is good for pension plans.

The point I was trying to make above is that better risk management by banks that lend to hedge funds would be actually beneficial to pension funds, as opposed to letting hedge funds blow up randomly, whose value is as yet not established.

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