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Sooner or later, investors will wisen up to the fact that hedge funds are not an asset class; they are a compensation scheme. Who makes the decision to put pen

• kasey_junk 12y ago
  > Who makes the decision to put pension funds into hedge funds anyway? Pension fund managers. They are often also well compensated for this decision making process. Many, many hedge funds and ibanks spend as much time/energy courting pension fund managers as they do generating returns. This is because the customers of the pension (the people that will want the benefit) are largely a captive market and are frequently unsophisticated financially. Its one of the many reasons I will not take a job that uses pensions as a benefit (and am baffled when unions fight so hard to keep them).
  • pkaye 12y ago
    Public unions like pensions because they are defined benefit plans and are guaranteed a specific monthly benefit. The risk is passed to the tax payers because they need to cover any poor investments.
    • kasey_junk 12y ago
      Let me rephrase. I don't understand why union members feel comfortable trusting a large portion of their employment benefits to the whims of the legislatures or much more rarely now, private companies, that "garauntee" them, nor to the capabilities of the pension manager. The downside of lack of mobility, lack of choice, and poor performance all seem like they would be deal breakers to me, but again, I've never worked in a pension system. Defined benefit plans can of course be had without using a pension so that seems a red herring.