Friday, February 10, 2012

South Carolina Throwing in the Towel on Alts?

Follow-up to hedges with few edges. While North Carolina shoves billions into hedge funds, South Carolina Treasurer Curtis Loftis is singing a different tune. Below, he speaks with Deirdre Bolton on Bloomberg Television's "Money Moves", discussing governance of state pension funds.

Love what he says: "We have a fund that underperforms, is overly complicated, we pay too much in fees and it has too much in risk. We are not alone. South Carolina is like most states, we are all chasing unrealistic high rate of return. As we all diversify, we are going to have problems. We are guaranteed high fees but not guaranteed high success. Pension plans send a lot of money to New York and we got to be careful about what we buy."

And he's right, there isn't much transparency in hedge funds and private equity. South Carolina is at 50% allocation in alternatives. Holy cow! Listen to Curtis Loftis, he knows what he's talking about. Those who don't listen and keep piling into alternatives, praying for a miracle, will suffer the same fate as Apollo Creed. Ding! Ding! Time to throw in the towel on alternatives.

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