Doubling Down
In the face of three years of “massive hedge fund underperformance,” the report added, the comptroller continued the gamble by almost doubling -- increasing by 86 percent -- the assets poured into the managers between 2009 and 2011.
Freeman said DiNapoli and Chief Investment Officer Vicki Fuller have taken "aggressive steps" to reduce hedge fund investments and limit fees, and that the system hasn’t put money into a hedge fund in well over a year.
The report also criticized the lack of transparency related to the system’s private equity investments, saying the comptroller hadn’t taken sufficient action to make sure funds were disclosing all their fees and expenses.
The pension system "has only recently discovered what should have been clear long ago -- that making a commitment to alternative investments places a much greater monitoring burden on the investor," the report said. "Taking on asset allocations that are complex to monitor and oversee and only belatedly understanding the challenges reflects poor planning."
This article was provided by Bloomberg News.