Pension Pulse

Matthew J. Belvedere of CNBC reports, Why anyone would buy a 30-year bond 'absolutely baffles me,' Warren Buffett says : Billionaire investor Warren Buffett told CNBC he can't see any reason for investors to buy 30-year bonds right now. "It absolutely baffles me who buys a 30-year bond, the chairman and CEO of Berkshire Hathaway said on "Squawk Box" on Monday. "I just don't understand it." "The idea of committing your money at roughly 3 percent for 30 years ... doesn't make any sense to me," he added . Buffett said he wants his money in companies, not Treasurys — making the case throughout CNBC's three-hour interview that he sees stocks outperforming fixed income. Buffett has a lot to say this time of year. In his widely read annual letter to shareholders of his Berkshire Hathaway holding company, the Oracle of Omaha blasted hedge funds and their high fees and urged average investors to buy regular index funds...

Barbara Shecter of the National Post reports, OMERS investment returns surge 10% as net assets hit $85 billion : OMERS, the pension plan for Ontario’s municipal employees, posted an investment return of 10.3 per cent for 2016, net of all expenses. The return beat both the benchmark of 7.9 per cent and the previous year’s return of 6.7 per cent. Net assets grew to $85.2 billion, up $8.1 billion . “Our strong investment returns in 2016 reflect the value of our well-diversified portfolio of high-quality assets, which we are continuously building,” said Michael Latimer, chief executive of OMERS. “All of our asset classes produced solid returns.” One of Canada’s largest defined benefit pension plans, OMERS invests and administers pensions for more than 470,000 members from municipalities, school boards, emergency services and local agencies across Ontario. The pension’s funded status improved last year for the fourth year in a row, increasing to 93.4 per cent. It was booste...

The Caisse de dépôt et placement du Québec today released its financial results for calendar year 2016, posting a 10.2% five-year annualized return : La Caisse de dépôt et placement du Québec today released its financial results for the year ended December 31, 2016. The annualized weighted average return on its clients’ funds reached 10.2% over five years and 7.6% in 2016. Net assets totalled $270.7 billion, increasing by $111.7 billion over five years , with net investment results of $100 billion and $11.7 billion in net deposits from its clients. In 2016, net investment results reached $18.4 billion and net deposits totalled $4.3 billion. Over five years, the difference between la Caisse’s return and that of its benchmark portfolio represents more than $12.3 billion of value added for its clients. In 2016, the difference was equivalent to $4.4 billion of value added . Caisse and benchmark portfolio returns “Our strategy, focused on rigorous asset selection, contin...

Hema Parmar of Bloomberg reports, Gotham Hedge Fund Explores Shifting fees to Tie Pay to Returns : Gotham Asset Management , the $6 billion money manager run by Joel Greenblatt and Robert Goldstein, is exploring a new fee structure that ties more of the fund’s pay to performance. The firm is in talks with some investors for its Gotham Neutral Strategies hedge fund about charging one fee: the greater of a 1 percent management fee or 30 percent of returns that exceed the fund’s benchmark, according to two people familiar with the matter. The equity fund currently charges 1.5 percent of assets in management fees and 20 percent of profits, one of the people said . Hedge funds have been trimming and altering their fees amid a backlash over lackluster returns and criticism that the standard model of charging a 2 percent management fee and a 20 percent incentive fee is too expensive. Most hedge funds charge investors too much for the performance they deliver, Greenblatt, who i...

In a recent blog comment, Yves Smith of Naked Capitalism laments, CalPERS’ Private Equity Portfolio Continues to Earn Way Too Little for the Risk : We’ve said for the last couple of years that private equity has not been earning enough to compensate for its extra risks, that of high leverage and lack of liquidity. One of the core tenets of finance is that extra risk-taking should be rewarded with higher returns over time. But for more than the last decade, typical investor portfolios of private equity funds haven’t delivered the additional returns, typically guesstimated at 300 basis points over a public equity benchmark like the S&P 500 . We’ve pointed out that even that widespread benchmark is too flattering. Private equity firms invest in companies that are much smaller than the members of the S&P 500, which means they are capable of growing at a faster rate over extended periods of time. The 300 basis point (3%) premium is a convention with no solid analytical foun...