Riley: RI Treasurer & Hedge Fund Debacle – Worst Returns in a Decade
Tuesday, March 08, 2016
Two weeks ago Treasurer Magaziner wrapped up Rhode Island’s Pension Fund 2015 performance summary right where he began his campaign in 2014. His two sentence summary for the worst year in a decade is printed in full below. The treasurer managed to lie to the members of his own commission and as a result to all Rhode Islanders as well.
XI. Treasurer’s General Comments
“Treasurer Seth Magaziner stated that portfolio diversification was a positive during the previous calendar year 2015 was one of the most challenging years since the financial crisis, with global equity markets down 2.5%. Diversification limited portfolio losses to only .25%“.
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Treasurer Magaziner thanked the Commission members for their commitment and thoughtful participation over the last year. (pg 8) The documents issued in the same report show Magaziner’s tendency to spin and lie. see page 35
His first spin, the return on ERSRI for 2015 was actually negative 1.68% not -0.25% as Magaziner states. This larger negative number figure arguably still overstates the Treasurer’s performance as Private Equity valuations are in serious decline and ERSSI hasn’t revalued their investments since September 30. Ditto for real estate and we know Private Infrastructure is also in decline. Second spin, since when is the Benchmark “Global Equities”? But since he brought it up Rhode Island does have Global Equity exposure both in Hedge Funds $587 million (lost 1.83%) as well as approximately $1.3 billion in Foreign markets with losses of 7.24% vs the 2.5% Magaziner cited for global equities.
So that we can compare I’ve made a table below from Magaziner’s report I assume the spin doctor will spin Projo something else because he knows they will dutifully report whatever he says rather than fact check.
The table below is a sample of the worst performers, some of which we have pointed out before. Once again the claim that hedge funds are helping Rhode Island and its pension beneficiaries is a fabrication and Cliffwater (the hedge fund advisor) and the entire State Investment Commission should be replaced.
Michael G. Riley is vice chair at Rhode Island Center for Freedom and Prosperity, and is managing member and founder of Coastal Management Group, LLC. Riley has 35 years of experience in the financial industry, having managed divisions of PaineWebber, LETCO, and TD Securities (TD Bank). He has been quoted in Barron’s, Wall Street Transcript, NY Post, and various other print media and also appeared on NBC News, Yahoo TV, and CNBC.
Related Slideshow: Timeline - Rhode Island Pension Reform
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