Heather Gillers
speaker
548 appearances
11 recordings
1 series
first heard Nov 2018
last heard Oct 2021
Heather Gillers’s voice in public audio — every appearance, attributed to the second.
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Appearances
Whereas an alternative investment, you're probably planning to hold it for five or 10 years at the minimum.
And if you do have to sell it in an emergency, you could end up getting a lot less than you hoped.
They are riskier in a number of ways.
They're more complex.
They're often more expensive.
So if you don't end up with high performing investments, you could end up paying a lot for returns that are at or below what you would get for much cheaper in the private markets.
They're also just like typically riskier ventures.
That's why they sometimes come with very high rewards and why pensions turn to them to try and juice up returns.
But of course, that risk doesn't always pay off.
And so you run the risk that you don't get that high reward.
Liquidity is another risk.
So in an emergency where there's a downturn in the market or for whatever reason you need to pay out more than you had expected or you have less on hand than you expected, if you need to cash out because these are illiquid assets that aren't traded on public markets, you could end up paying a pretty big penalty to cash out.
Big pensions have been using alternative investments for at least 20 years, but the amount and the prevalence is way up.
So today, according to some data we looked at from Boston College Center for Retirement Research, alternative investments make up 24% of public pension fund portfolios.
In 2001, that share was 8%.
Well, fund managers have a hard job because for a lot of state and local government pension fund managers, the assets on hand are not enough to cover future benefit promises.
And the government sponsors, the government employers of the people who benefit from the pension plan,
you know, are trying to avoid the less politically palatable solutions of like raising taxes or diverting money from elsewhere in the budget.
And instead, they're turning to the fund managers, the investment chiefs of the funds and saying, you know, can we get 7% as a common investment target for public pension funds?
Can we get 7% on our investments and fill in some of the gap that way?
Showing 21–40 of 548 · page 2 of 28
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