And he now says that, on average, the risks being carried by public pension funds are at least 20 percent greater than they are reporting, largely because they aren’t taking account of the true risks embedded in private equity.
Private equity returns exhibit low volatility because they are based on infrequent appraisals of private companies.
“When you adjust for the stale pricing in private equity funds, the risks are much greater,” he said in a telephone conversation.
Unlike with 401(k) retirement accounts, workers in public pension plans don’t get to decide where their money is invested.
Instead, academic studies suggest that the vast majority of us need diversified holdings of the entire public stock and bond markets through cheap, well-regulated funds, mainly index funds, invested with horizons of a decade or longer.
Persons:
”, don’t
Organizations:
Securities, Exchange Commission
Locations:
Oregon