What I find scary about pension funds current appetite for alternative investments is why are they investing in them really? Do they believe those investments are really going to provide superior returns despite the paucity of evidence for this or are they attracted to the opacity of valuations? It seems to me that with illiquid and difficult to trade investments there is the opportunity for the pension fund managers to make up pie in the sky valuations. This allows them to fiddle the returns they can claim to have made with made up numbers. This has already happened with superannuation funds in Australia. https://www.investmentmagazine.com.au/2020/04/more-pain-ahead-as-funds-writedown-assets/
There are so ma y things wrong with pension funds, or rather the investment consultants that push them I to these assets that I don’t know where to begin…
What I find scary about pension funds current appetite for alternative investments is why are they investing in them really? Do they believe those investments are really going to provide superior returns despite the paucity of evidence for this or are they attracted to the opacity of valuations? It seems to me that with illiquid and difficult to trade investments there is the opportunity for the pension fund managers to make up pie in the sky valuations. This allows them to fiddle the returns they can claim to have made with made up numbers. This has already happened with superannuation funds in Australia. https://www.investmentmagazine.com.au/2020/04/more-pain-ahead-as-funds-writedown-assets/
There are so ma y things wrong with pension funds, or rather the investment consultants that push them I to these assets that I don’t know where to begin…