Saturday, 23 August 2014
Last updated 20 hours ago
Jun 19 2014 | 9:06am ET
The head of Massachusetts’ main public pension fund says he won’t pay for luck—and would prefer to pay less for everything else, as well.
Michael Trotsky is overseeing the transformation of the Massachusetts Pension Reserves Investment Management’s hedge-fund portfolio, shifting money out of funds of hedge funds and into direct hedge fund investments. That process is still underway, but Trotsky is already looking towards the next step: separately-managed accounts.
“That’s the next frontier and we might be at the forefront of it,” Trotsky told Reuters. “It will give us full transparency and the ability to better control the assets.”
Transparency and control aren’t the only things on Trotsky’s mind; cost isn’t far from it, either.
“We love to find skillful managers and we’re happy to pay fees for that,” Trotsky told Bloomberg News. “We’re unwilling to pay for beta exposure or luck.”
MassPRIM is pushing for fee reductions that could save it $7 million per $100 million invested, Trotsky said. And the $59 billion pension is also looking at hedge-fund replication strategies to lock in further savings.
“I value a basis point of cost reduction more highly than a basis point of return,” he said. “We don’t know from year to year what the markets will return but we can predict with a lot of accuracy what our cost structure will be.”
Aug 4 2014 | 7:42am ET
By now, U.S. and international subscribers have received their home or office delivery of the special 500th issue of Futures magazine. You can too!—a very special offer follows. The issue is the largest in years—filled with the best trading strategies and stories from 43 years of being the primary publication for commodity, stock, options and forex traders. Read more…
The July/August 2014 issue is our largest in years—filled with the best trading strategies and stories from 43 years of being the primary publication for commodity, stock, options and forex traders.
The Alpha Pages Editor's Note