"Special"?

The following item caught my eye on Bloomberg:

Los Angeles City Employees’ Retirement System is scheduled to discuss a staff report requested at a prior meeting on the pension’s specialized private equity and real estate investment programs…. The programs agenda targeted “emerging managers, funds focused on underserved markets, demographically targeted partnerships, and geographically targeted investments.”

Since inception in 2004, the programs have committed $198 million to 23 funds that have earned an average annual return of 3 percent, according to the staff report. Within that, seven non-traditional real estate investments have returned negative 4 percent.

An annualized loss of 4% in real estate over the past decade?! Even 3% p.a. for 10 years in private equity?! Is this “specialized” program a bad idea or just bad execution? (the choice is not mutually exclusive—it could be both). I’d be curious to know how many other public plans have similar programs and how those programs have performed.

Kudos to whomever it was at LACERS who asked for this program to be reviewed. I’m sure (hope) the trustees will remember their fiduciary obligation is to the beneficiaries of the System, and ultimately, to the taxpayers who are on the hook for the decisions these trustees make.

• 19 Mar, 2015

  Negative Yields

  One of the (many) perplexing phenomena facing investors is the persistent (and falling) low yields on government ...

• 18 Sep, 2023

  Beach Reading

  September is still beach time, so I have a few more recommendations for you. One nonfiction and four fiction, including ...

• 30 Jun, 2015

  Puerto Pobre

  An honest politician may be oxymoronic (or is just moronic?), or maybe it's the black swan that surprises us when seen. ...