Legislation requiring more disclosure was introduced in at least seven states this year, but with Brown’s signature, California became the only one to enact it into law. In many cases public pensions have lobbied against the legislation because of concerns that disclosure might alienate private equity managers and lock the pension funds out of potentially lucrative investments that they say they need to fill a $1.8 trillion gap in needed funding for benefits.
For more on public pensions’ opposition to more disclosure, click here.
That was the case in California, where the staffs of Calpers and Calstrs, the nation’s biggest public pensions, backed amendments to curtail the amount of information their private equity managers would be required to disclose about their fees and expenses.
Fee Structure
Firms often charge investors fees of 1 percent to 2 percent, plus 20 percent of profits, though they sometimes add other charges, as well. The all-in cost can run upwards of 3 percent, 100 times what an institution might pay to invest in an index fund. The pensions sign contracts that keep most of the numbers hidden from outsiders.
James Maloney, vice president for public affairs at the American Investment Council in Washington, didn’t respond to a phone message. The council represents private equity firms.
This article was provided by Bloomberg News.