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Can someone clarify this? Because the article explains: > "Over the last 10 years, the return on those “public asset classes” has surpassed expectations by mo
by jongala 11y ago
Can someone clarify this? Because the article explains:
> "Over the last 10 years, the return on those “public asset classes” has surpassed expectations by more than $2 billion, according to the comptroller’s analysis. But nearly all of that extra gain — about 97 percent — has been eaten up by management fees, leaving just $40 million for the retirees, it found."
Note "surpassed expectations" in there. That makes it sound not like the total return was $2B but that the return was $2B above projections, and after fees this was functionally erased leaving return at projected level. Am I misunderstanding the language here?
- mynameismonkey 11y agoMy read is that the fund managers created an additional $2B in exceeded expectation/value, then billed 97% of that created value. In other words, stay home, don't use these guys, don't pay them $2B, get the same returns. That's how I understand the point.
- jongala 11y agoYeah that's how I'm reading it but then I guess the question then becomes whether the projections were made specifically with a hedge fund strategy in mind or if they would have been the same for a more conventional investment approach. I'm not trying to discount the take-away that the fees are very high regardless of the projection basis, but I think it's important to understand the difference. If these criticisms are not clearly reasoned or communicated, I think that fuels the perception in the financial community that these complaints are hysterical and unfounded and should be dismissed.
- tedunangst 11y agoThere's no guarantee that using other managers would have resulted in the same "expected" returns.
- tedunangst 11y agoIt also makes it sound like the entire fund value was reduced to "just $40 million".