Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Support MFO
Donate through PayPal
San Diego County Fires Its High-Priced, Leveraged, Underperforming Outside Manager
FYI: Last August [1], we called out the San Diego County retirement fund for paying way too much in fees to Salient Partners, its outside pension fund manager. Terrific reporting by Dan McSwain at the San Diego Union-Tribune [2] alerted readers to a dramatic increase in the use of leverage once Salient took the reins. Last night, the county fired Houston-based Salient, according [3]to the Union-Tribune Regards, Ted http://www.ritholtz.com/blog/2015/07/san-diego-county-fires-its-high-priced-underperforming-outside-manager/print/
Who in SD country board made these poor decisions?
The City of San Diego simplified its pension plans. It barred the use of leverage; it now favors a low-risk, asset-allocation approach. As we discussed last year, it is reaping the rewards. The city’s fund has outperformed the county’s, earning 13.6 percent a year versus Salient Partners returns of 9.7 percent a year. That’s before fees; the city’s net returns with its much lower cost-basis, look even better after fees.
By contrast, San Diego County spent $103.7 million in investment and administrative fees in 2013. The $10 billion pension fund is one of the highest-cost plans in the country as a percentage of assets.
Comments