Pension Funds oftentimes are just duplicating existing market strategies and exposure by allocating capital to Hedge Funds while paying higher costs for underperforming a simple SPY Long position the last 7 years.
0:00readings this is econ matters it is May 15 2016 going to talk a little bit about
0:06hedge funds Bloomberg has this article hedge funds urged benchmarks before
0:12charging fees the Teachers Retirement System of Texas in life are among those
0:19that called on managers to produce out for gains above market benchmarks before
0:24charging incentive fees in a range of investing terms as funds trail the
0:32standard the S&P 500 index for the sixth straight year some clients claim that
0:38managers still quite little information about their holdings and type the
0:41investors cashed lagging behind benchmarks toppers Retirement System
0:47said in September it would divest its four billion for hedge funds after
0:50official the program could be expanded to justify the cost to the ideas that
0:55funds were ultimately supposed to be more different than just straight up
1:02money managers because anybody that was just really long oriented in the market
1:11you know just buying stocks etc calpers has a huge staff a bunch of these
1:15pension funds and Chicago generate huge staff they can just buy a stock they can
1:20invest in the index
1:21why are they paying 20 and 22 some hedge fund that basically doing the same damn
1:26thing and so a lot of these hedge funds really aren’t doing quote-unquote
1:31alternative strategist the alternate strategy is something to provide a hedge
1:36from your regular long holdings that the pension fund hold that they can do
1:41themselves
1:42in some sense to their portfolio so for the 2015 top-performing fund which one
1:54do you know more in a set budget these right long-short equity long-short
2:00equity equity many stretchy shirt equity long-short strategy equity macro long
2:07short equity quantitative futures this is probably the only guy here that doing
2:13something that and I guess theoretically if you couldn’t define the old days
2:19right
2:20the entire market was just basically a long and that was all funds did in
2:27mutual funds in than anybody that has any shorter equity exposure period I
2:33guess that to hedge fund what i’m saying is the new definition needs to be
2:38changed because mutual funds that defines pension plans they can all go
2:45short certain equities they don’t need to pay 20 and 24 that somebody have
2:54better dinner fire weather long does it take to 24 that somebody that what you
3:02paid to them 24 somebody is doing alternative strategies just buying or
3:07selling traditional assets long or short strategies within the market
3:14and this is probably the only person that has any resemblance to an
3:19alternative strategy to a normal pension funds tragic that they can ploy is doing
3:24here so top-performing funds between 250 million and a billion in assets again
3:30macro longshore long short short short macro neutral all these are along sure
3:36basically stock holdings 10:34 basically the first quarter and smokers 7000 some
3:52quarters
3:55Yum Brands Dow Chemical bill Ackman who has concentrated strategy Canadian
4:04Pacific Railway value on GMA Apple’s
4:15sandy has more diversified approach sped up names match group Superman and make
4:26advisers to view media MGM Resorts Microsoft
4:35resource America time water helps Windies Tiffany Howard Marks from
4:49Oaktree Capital Management
4:52media
4:59blackstone BHP Billiton seen this individual is Dynegy said individuals
5:19least trying to do more than just the typical names but destructive side is
5:25how many hedge fund road Apple up and we’re all invested in Apple for the last
5:31five years and it’s just hilarious because you don’t need to pay anybody to
5:37mom pops could figure out to invest in Apple right to pay anybody to 120 that’s
5:42no market head coach Steve Berkowitz serious whole beans Berkshire Hathaway
5:52Bank of America David Tepper one of the best and I would call these all these
6:03guys money matters not hedge funds and money managers naturally the new
6:07definition sure on the edges in may do some pretty interesting strategies with
6:14some of the way they set a part of a portion of their sons or set up certain
6:21trades that getting to do this but it’s such a small portion of their overall
6:27proposed that it’s not know where I mean p.m. so he’s one of the best money
6:33managers in the street but still is a money manager general motors Apple
6:38Pfizer hour
6:41report back the Red Eagle Materials you know energy yield again
6:54Bassey actually is probably in the past years but last couple years but this
7:01year he’s probably acting like a hedge fund is very little is portfolio and
7:06doctor he has a billion trying to do some kind of weak Chinese currency sort
7:18of you probably in some sense catch to your overall pension holdings
7:27Topcon and hedge funds the shah Renaissance technology arcane Asset
7:34Management quantitative Management Associates these guys are actually doing
7:41strategies that are ahead of the pension funds normally do in their portfolio and
7:50so this is a different strategy and some sense then justify pain to employing
7:58so mister funds that are you working on artificial intelligence Bridgewater
8:04associates Renaissance technology developed capital list actually
8:16interesting but the list of investment banks these guys a list here are
8:21actually through their ICC so fixed income currency and commodities are
8:28actually doing strategies that could be considered market hedges the problem is
8:35right is the regulatory environment is very pervasive right now and their
8:44businesses going down tremendously so they’re being forced out of this
8:48business lock stock and barrel so and attention that they actually do practice
8:56alternative market strategies than just long or short and so you know the
9:04phenomenon that has been occurring is people can read the numbers and they can
9:10see damn you know I could just buy the S&P 500 and most of these hedge fund why
9:15my pain to in 20 and so what hence the term of what you should pay June 24 our
9:23strategies are online and traditional asset classes
9:29just long or short equities there are all kinds of strategies hundreds of
9:34strategies as a very vast spectrum where their inherent edges in the market and
9:43their proprietary advantages that have been identified and black boxes and
9:49that’s what you pay 20 and 24 and those are truly alternative investment than
9:54what the pensions funds can do on their own they have huge budgets huge staff
9:59they could do all this and large expertise they can do basically they can
10:04sure as hell by atler sell Apple on their own they don’t need to pay 225 but
10:09somebody has identified for instance here’s a couple of just traditional
10:15market edged strategies that a bunch of the ETS we’re very poorly constructed
10:20and you can study and look at the rudiments of their construction and
10:28realized they were going to lose value regardless of market direction couple
10:32that with the fact that they came to market looking to take advantage of the
10:36ETF phenomenon in the third
10:40driver is that they often came in hot market so that when the housing market’s
10:45hot where certain biotechs a hot or something and a lot of them were just
10:51even poorer version so you know PNC versions of these pts and so when they
10:57come out strategy with you came in and identified which ones fit into this
11:01model and shorted him and you made a ton of money because there was inherent edge
11:06that was built in to their construction that’s an actual strategy right that
11:13isn’t long or short equity and is an actual hitch another strategy right
11:18short IPOs a lot of these IPOs it came out in 2015 the reason you’re so what
11:24are you looking forward looking for a catalyst right the markets all-time
11:29highs that’s a reasonable these firms are coming to market they’re trying to
