Bloomberg News reports that Néw York City’s public employees’ pension fund is considering an investment in a hedge fund managed by one of Eva Moskowitz’s key backers.
“The board of the $54 billion pension for civil employees, including lunchroom workers and other school aides, plans a vote Tuesday on whether to invest in Joel Greenblatt’s Gotham Asset Management LLC, according to a copy of the executive agenda. Greenblatt is co-founder of Success Academy, New York’s biggest charter-school network. Its director, Eva Moskowitz, a former city councilwoman, helped block Mayor Bill de Blasio’s bid to cut aid to charter schools.”
Diane Ravitch's blog 
This should be interesting. Really interesting.
I think we go down a dangerous path when we expect even public pension funds to take into account the personal and political interests of managers of investment products that are otherwise suitable for inclusion in a pension portfolio.
There are other places than New York City where an investment manager with “liberal” personal or political interests might be questioned if more than investment suitability were to be part of the evaluation process.
If StudentsFirst starts a hedge fund and pitches it directly to the NYC pension funds, I’d have a problem. But an otherwise successful fund that happens to be managed by one of Eva Moskowitz’s supporters ought to be considered on the same basis that any other investment proposal brought to the trustees would be.
No Harmiclir,
Read Peter Mallouk’s assessment of poor hedge fund performance and lies concerning returns.
Long term, the only people who make money with hedge funds, are the owners and managers.
And, the politicians and their spouses who use them to fleece pensioners.
Check out the lawsuit in N.J.
Linda, I wasn’t making any claim about the benefits (or, in this case, obvious detriments) of investing in hedge funds.
I agree that the NYC funds would make a bad decision to continue to invest in the hedge fund sector.
All I am saying is that while hedge funds are part of the pension funds asset allocation plan and that they continue to allocate money to hedge funds, I am not interested in having the boards of directors investigate the political leanings of the managers of those funds.
If the hedge funds themselves are making investments in ventures that damage public employees then they should not be considered for investment by public funds. If the hedge fund otherwise is making “hedge-fund” type investments that don’t target public employees I oppose some political test for the managers of those funds. That way lies a sort of policy-making that will always come back to hurt us when retirement or pension funds managed by “conservative” directors start excluding investments managed by people they think have the wrong political or policy inclination.
Harmiclir,
A convenient argument as old as time.
Consumers can choose to go with progressive Credo Cellular and Credo credit cards, rejecting ALEC-supporting phone and credit card companies. Maybe we’ll pay a little more.
We can shop at independents or, at Costco, instead of Walmart, and maybe pay a little more. We can sacrifice the patented tufts of Koch’s toilet paper.
What is at stake is Social Security, public education and worker pay and rights.
When the TIAA Institute paired with the Arnold Foundation on pension “research”, I cashed out. If the return at my new investment firm is marginally less, at least, I won’t be party to the nation’s economic fail (and, its influence on me and following generations) nor, will I be complicit in the loss of democracy.
“Robbin The Hood”
Robbin the hood
Of public schools
Replacin with flood
Of charter tools
Over the hedge
With his Merry Men
Robbin The Hood
Has struck again
Gotham Asset Management (GAM)? Even the acronym sounds evil!
NOOOOOOO!
Unfortunately, this is nothing new: public employee pension funds have for years been investing in private equity firms that take over companies (some of them with unionized workforces), which then fire workers, strip the companies of their assets (while further enriching the PE company with all sorts of fees) and then sell off the carcass to a clueless investing public.
Public school teachers and their unions are facing basic survival issues right now, but should that battle be won, the next task is to re-imagine their pension funds as vehicles for broad economic development, rather than the typical Wall Street smash and grab routine.
Phyllis Borzi at the Dept. of Labor, is spear heading an attempt to close the loophole that allows financial advisors to enrich bankers, brokers and fund managers, at the expense of their clients. Her efforts are backed by the AARP.
The retiring president of the Communications Workers of America may end up with an appointment to the Board of Governors of the Federal Reserve.
The anti-Wall St. movement is growing. There should be a national party when and if one of the top bankers, who committed mortgage fraud, goes to jail.