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Posts Tagged ‘Oregonian’

See prior September 18. 2017 blog post  for important background regarding PERS adoption of age weighted IAP accounts.

Once again, it appears that younger workers are being short changed by PERS in the adoption of age weighted IAP accounts.  Remarkably, there was no opportunity for public discussion on vendor selection or strategy regarding how the age based portfolios would be constructed.

Rather, it was announced in September that the French insurance conglomerate AXA’s subsidiary Alliance Bernstein, what some call the AIG of France, would be awarded the contract to manage more than $8.2 billion in participants IAP accounts.   Some will argue that this isn’t really an $8.2 billion contract since it will simply involve reshuffling assets among participants internally.  My thought would be, tell that to the participants.

Paris Based AXA and Le Vie Bonne Courtesy of Oregon PERS

Screen Shot 2017-09-28 at 1.24.15 PM.png                 Screen Shot 2017-09-28 at 1.35.01 PM.png

One obvious question to PERS directors and Democratic State Treasurer Tobias Read is why a domestic vendor was not chosen for this important public contract.  All sitting members of the Oregon Investment Council were appointed by Democratic Governors.   And where were the labor unions?

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In a front page story Sunday May 20, 2012, Ted Sickinger of the Oregonian provided a detailed review of private equity valuation concerns.  This portfolio of opaque investments has grown substantially and poses unique risks to Oregonian PERS participants.  In his article, Sickinger notes this analysis is based upon original Parish & Company research.

Although an excellent article, there was still no mention that Oregon PERS does not keep independent records of “carried interest” fees paid to the private equity general partners nor K-1 annual partnership statements summarizing activity.  These private equity firms include Blackstone, KKR and Fortress. The fees cited in the article are for “management” and do not include the carried interest fees which are typically 10 times the annual management fee.

It is indeed remarkable that the Oregon State Treasury does not maintain these independent records.

Here is a link to the story:  Oregon PERS: Private equity investments pose unclear future

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