By Simone Foxman and John Gittelsohn
The New York state comptroller’s decision to stick with hedge funds
despite their poor returns has cost the Common Retirement Fund $3.8
billion in fees and underperformance, according to a critical report by
the Department of Financial Services.
The state comptroller, who
invests $181 billion for two systems covering local employees, police
and fire personnel, "has over relied on so-called ‘active’ management by
outside hedge fund managers," the department said Monday in the 20-page
report. "For years the State Comptroller has been frozen in place,
letting outside managers rake in millions of dollars in fees regardless
of hedge fund performance."
Spokeswoman Jennifer Freeman defended
the office of comptroller Thomas DiNapoli, accusing the department of
harboring political motives.
"It’s disappointing and shocking that a regulator would issue such an
uninformed and unprofessional report," Freeman said in a statement.
"Unfortunately, the Department of Financial Services seems more
interested in playing political games, so remains unaware of actions
taken by what is one of the best managed and best funded public pension
funds in the country."
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Source: Bloomberg Markets (via The Empire Report)
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