My Power and Money producer, Wendy Furrer, and I are sitting here on the sandy beaches of Dana Point California now that Opal Financial's Alternative Investing Summit has wrapped up.
It's amazing that Amaranth, for all the media coverage it's gotten, has not been a big theme here. Pension and endowment fund managers have a tough job: they've got to find a way of making up for shortfalls in budgets to keep state universities humming. Or close gargantuan gaps in under-funded pensions. Their holy grail: alternatives. They know and fully understand the risks. But when the bigger risk is pulling the plug on the girls' soccer team or not having the funds to pay out retiree benefits, the risk equation may be a bit easier to understand.
Yale has been mentioned at least a dozen times. The name is spoken by fund managers in tones of reverence and awe. It is a prime example of alternative investing at its best. But as a recent Merrill Lynch note remarked: Yale was successful because it did a dozen years ago what no one else did. Will endowments and pensions today find success in doing what their peers are doing?
Still, the pressure is on these fund managers. The public and their constituents are depending on them. And the push is on for plans like New York City's total of $100 billion plan to start boosting allocations to alternatives. Today, 9% in private equity and real estate. Tomorrow, how much of that money will go into hedge funds (at 0% now), or timber or vineyards?
As for us, today we're enjoying the ocean, the sand, the sun. Tomorrow it's back on a plane to HQ.
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