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Started By
Message
Calpers (US largest pension fund) remove its risk protection a few weeks ago ($Billion)
Posted on 4/10/20 at 5:28 pm
Posted on 4/10/20 at 5:28 pm
quote:
Three years ago, America’s largest pension fund made an unusual investment. It bought so-called tail-risk protection, a kind of insurance against financial catastrophe. In a market meltdown like the one sparked by the coronavirus, the strategy promised a massive payout -- more than $1 billion.
If only the California Public Employees Retirement System had stuck with the plan. Instead, Calpers, as the fund is known, removed one of its two hedges against a bear market just weeks before the viral outbreak sent stocks reeling, according to people familiar with its decision.
The guy in charge, Ben Meng, chief investment officer of Calpers, had a interesting response-
quote:
“At times like this, we need to strongly resist ‘resulting bias’ -- looking at recent results and then using those results to judge the merits of a decision,” Meng
Wasn't like he was warned not to do this in August
quote:
Calpers had been warned about the perils of shifting strategy. At an August 2019 meeting of its investment committee, Andrew Junkin, then one of the pension plan’s consultants at Wilshire Associates, reviewed the $200 million of tail-risk investments.
“Remember what those are there for,” Junkin told Calpers executives and board members, according to a transcript.Sure enough, the position Calpers gave up generated a 3,600% return in March.
In order for the pension fund to work, it must do one % better than the S&P has done over the past 20 years or taxpayers pick up the bill.
quote:
When the pension plan doesn’t meet its 7% target, taxpayers may have to kick in more money to make sure there’s enough to meet its long-term obligations.
Over the past 20 years, the portfolio has returned 5.8% annually, compared with 5.9% for the S&P 500
LINK
10
Posted on 4/10/20 at 5:33 pm to TigerintheNO
Posted on 4/10/20 at 5:36 pm to LoneStarRanger
quote:
Yu, a U.S. citizen born in China
Curious coincidence.
Sort of like something a foreign agent might do as part of an asymmetric warfare strategy.
Posted on 4/10/20 at 5:45 pm to TigerintheNO
quote:
Before joining CalPERS in 2008, Yu worked at Barclays Global Investors as a senior portfolio manager, Lehman Brothers as a risk officer, and Morgan Stanley as a fixed-income trader.
Yikes.
quote:
The explosive allegations center on Meng’s three-year stint, which ended in 2018, of helping oversee China’s $3 trillion in currency reserves. During that time he was deputy chief investment officer of China’s State Administration of Foreign Exchange, or SAFE.
quote:
Meng was hired for his job at the Chinese fund via a government recruitment plan known as the Thousand Talents Program. That, according to Banks, likely includes a lifelong mission to support Chinese authorities.
LINK
This post was edited on 4/10/20 at 5:50 pm
Posted on 4/10/20 at 6:08 pm to LoneStarRanger
quote:Yu (Ben) Meng PhuckD
Yu (Ben) Meng, Ph.D.
Posted on 4/10/20 at 6:12 pm to TigerintheNO
Hmmm....
I am sure China would be happy to bail the fund out.
I am serious by the way.
They would essentially own the pension fund, and control of it and its investments (for those not paying attention, CalPERS has been a royal PITA for all sorts of SJW corporate activities).
Oh, and all past and current CA state employees would be beholden to it.
I am sure China would be happy to bail the fund out.
I am serious by the way.
They would essentially own the pension fund, and control of it and its investments (for those not paying attention, CalPERS has been a royal PITA for all sorts of SJW corporate activities).
Oh, and all past and current CA state employees would be beholden to it.
This post was edited on 4/10/20 at 6:23 pm
Posted on 4/10/20 at 6:24 pm to TigerintheNO
That man is a hero
Hopefully the complete loss of the fund will send a clear message about pension plans
Hopefully the complete loss of the fund will send a clear message about pension plans
Posted on 4/10/20 at 6:27 pm to TigerintheNO
quote:
The guy in charge, Ben Meng, chief investment officer of Calpers
He's owned by the CCP from what I've heard people say. His family all lived in China at the time of those interviewes I listened to so it's extremely easy to see how he could be "persuaded"
Posted on 4/10/20 at 6:42 pm to TigerintheNO
quote:Well if the timeframe is just the last 20 years bookended by two of the most notable crashes and an even more severe one in the middle, then that’s not too hard or a task, since you can’t get a 20 year period that is much worse.
In order for the pension fund to work, it must do one % better than the S&P has done over the past 20 years or taxpayers pick up the bill.
Now if it has to outperform it’s historical 10% annual gains, then would be much more difficult.
Posted on 4/10/20 at 7:07 pm to LoneStarRanger
quote:
Yu (Ben) Meng, Ph.D.
Does he like his bat Blue, Rare or Medium rare?
Posted on 4/11/20 at 12:42 pm to TigerintheNO
Hindsight is 20/20. The guy could be right though in the long-run if the markets bounce back.
Posted on 4/23/20 at 10:03 am to TigerintheNO
He never told the board he was exiting those positions
How does he still have his job?
How does he still have his job?
quote:
Yu Ben Meng — the chief investment officer of California’s public pension who has ties to Chinese espionage — sold off the fund’s investments in hedges against market downturn without the approval of the pension’s board, a move that cost the fund a billion-dollar payout following the coronavirus market crash.
The Wall Street Journal reported last week that Meng, who assumed his role as CIO for California Public Employees’ Retirement System (CalPERS) — the country’s largest public pension fund — in January 2019, reportedly made no mention of the fact that he had mostly exited the three funds when asked about them during a March teleconference with the board.
“They should perform well in this kind of a down market, as they were exactly designed to do,” Meng answered, according to a call transcript. “And from what we know . . . most of these strategies are performing as anticipated.”
quote:
Another fund that CalPERS withdrew from, Universa Investments LP, said it returned 3,612 percent.
The CalPERS board is scheduled to meet this week to discuss “how much authority it delegates to investment staff.” Meng came under fire earlier this year after being accused of participating in China’s “Thousand Talents Program,” which provides secret funding to U.S. academics and entrepreneurs in exchange for valuable information.
Posted on 4/23/20 at 10:12 am to TigerintheNO
Putting an obvious Chinese plant in charge of a US states pension fund. America is a joke at this point.
Posted on 4/23/20 at 10:16 am to TigerintheNO
quote:
Over the past 20 years, the portfolio has returned 5.8% annually, compared with 5.9% for the S&P 500
I think they have been lying about the return %
I think it's really like 2-3% but they cant admit it
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