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This Pension Still Blind to its Ways

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b9315201227z-1_20141120170334_000g5i96i61l-1-0The good news is that Rhode Island pensions are getting out of hedge funds. The bad is that some of the proceeds are going into private equity.

“In some cases, you’ve just seen the emperor has no clothes,” Rhode Island General Treasurer Seth Magaziner said in an interview.

Rhode Island in September decided to halve its hedge-fund investments, and it is redeeming from firms including Brevan Howard and Och-Ziff. It isn’t invested in York. The state plans to redeploy some of its hedge fund money into private equity.

High fees helped drive the decision. Mr. Magaziner said more than half the state’s gross returns from hedge funds was lost to fees and expenses over the three years that ended June 30. The pension’s costs of investing in other fund types relative to their returns were nowhere near as high, he said.

Mr. Dinan is taking steps to retrench at York, where assets under management have slumped to $17 billion this year, down 35% from $26 billion last year.

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E.J. Smith

Editor-in-Chief
E.J. Smith is Founder of YourSurvivalGuy.com, Managing Director at Richard C. Young & Co., Ltd., a Managing Editor of Richardcyoung.com, and Editor-in-Chief of Youngresearch.com. E.J. graduated from Babson College in Wellesley, Massachusetts, with a B.S. in finance and investments. In 1995, E.J. began his investment career at Fidelity Investments in Boston before joining Richard C. Young & Co., Ltd. in 1998. E.J. has trained at Sig Sauer Academy in Epping, NH. His first drum set was a 5-piece Slingerland with Zilldjians. He grew-up worshiping Neil Peart of the band Rush, and loves the song Tom Sawyer—the name of his family’s boat, a Grady-White Canyon 306. He grew up in Mattapoisett, MA, an idyllic small town on the water near Cape Cod. He spends time in Newport, RI and Bartlett, NH—both as far away from Wall Street as one could mentally get. The Newport office is on a quiet, tree lined street not far from the harbor and the log cabin in Bartlett, NH, the “Live Free or Die” state, sits on the edge of the White Mountain National Forest. He enjoys spending time in Key West and Paris. Please get in touch with E.J. at ejsmith@youngresearch.com.