So, it is with tear stained eyes that I note that I am back in Connecticut, and back at work. One advantage, if advantage you can call it, is that I will be blogging more frequently. It may sound surprising, but I found better things to do while I was in Vermont.
So, I start the new week by noting yet another piece of good news, relatively speaking.
Investors responsible for more than $2 trillion recently gathered at a resort in the Canadian Rockies, far from the news media and, more important, far from Wall Street.
Those in attendance, including leaders of Abu Dhabi’s sovereign wealth fund and France’s pension system, were there to consider ways to put their money to work together without paying fees to private equity firms and hedge funds. Over that weekend, three of the attendees completed the details of a $300 million investment in a clean-energy company.
The group holding the gathering, the Institutional Investors Roundtable, has kept a low public profile since it began in 2011, but it attracted 27 funds managing public money to its latest meeting and is spinning off concrete investments. The group is part of a much broader push by the world’s biggest pension and sovereign wealth funds to reduce their reliance on the Wall Street firms that used to manage almost all their money.
The efforts to change the way public money is managed are motivated, in no small part, by the big fees and lackluster performance that many hedge funds and private equity firms have delivered to their biggest clients in recent years. Investment managers like Leo de Bever, at the Canadian province of Alberta’s $70 billion fund, have found they can often manage their own money at a lower cost without losing out on returns.
(via NYTimes.com)
There are some impediments. In order to get experienced fund managers, you have to pay through the nose, and in many states you are not allowed to pay through the nose. But the expense of one or two out-sized salaries, as offensive as that is, pales in comparison to the cost of the bankers and hedge fund managers, and at least such a person would have undivided loyalty, and would be less likely to let their clients buy into the type of derivative time bombs that hurt Detroit so much.
The article reminded me of Louis Brandeis’s book, Other People’s Money and the Bankers Who Use It, that I mentioned in a previous post. He was mainly concerned with the tax that the bankers levied to float bonds for perfectly solvent municipalities (such as Detroit back then). He pointed out that those municipalities could easily float the bonds themselves, and spare themselves the outsize fees so common then and now.
So, this is good news. And speaking of good news, I have my own personal bit of good news to impart. About a year and a half ago, I was approached by a group called Newstex that wanted to distribute my ravings across the internet-for money. After deciding they weren’t certifiably crazy, and after perusing the contract to make sure there wasn’t a hitch, I agreed.
Well, yesterday, I got my reward. $26.08 which is maybe ten to twenty cents for every post I’ve written since I signed up. What more can you ask?
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