Sunday, April 12, 2009

Pension Funds And Recession

Participating in the meeting with CalPERS in February 2009, I learned how CalPERS work with hedge fund managers. The hedge fund strategy is written into the contract and serves as an input into the calculation of the entire CalPERS risk management model. To change the strategy, the fund manager must have the approval from the CalPERS. Understandingly, the fund manager strives to maintain CalPERS funds under the management and faces the dilemma of achieving the best performance versus maintaining the funds.

I felt that hedge fund managers don't have enough flexibility to adjust to the market conditions and take advantage of fast changes to maximize their performance. New CalPERS CIO Joseph Dear proposes to revisit the structure of management fees to achieve better alignment between the CalPERS partners and investors interests. He also agrees with the need for the market regulation and stresses, that the believe in markets self regulation is colossally expensive mistake.

No comments:

Post a Comment