Pay Millions, Lag the Market

Rhode Island’s pension investments in hedge funds have trailed returns earned by the Standard & Poor’s 500-stock index and have cost the state $70 million in fees in a single year.

How to Pay Millions and Lag Behind the Market - NYTimes.com: " . . . Fans of alternative investments argue that they can generate higher returns. But the increased risks, higher fees and lack of transparency associated with such investments make them problematic. A 2007 paper by Fiona Stewart at the Organization for Economic Cooperation and Development in Paris said that “lack of transparency makes the level of risk and type of exposure hard to gauge” in hedge funds. . . ."

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