Calpers Over Fellini for Paulson, Weill: Scene Last Night

John Paulson and Oscar Schafer after a concert of Italian film scores last night considered a not-quite-out-of-Hollywood drama: the decision by the California Public Employees’ Retirement System to divest its hedge funds.

“Those returns seem pretty abysmal,” Paulson said of the

4.8 percent annualized rate the largest U.S. pension fund earned on its hedge-fund investments over the last 10 years.

“They picked the wrong hedge funds,” Schafer said.

The hedge-fund managers, at the New York Philharmonic’s opening night gala, then turned to their suppers: antipasto (prosciutto, Parmesan and artichokes), an entree of beef and polenta, and cannoli and chocolate gelato for dessert. They were joined by Alan Schwartz, a former Bear Stearns chief executive officer who is now chairman of Guggenheim Partners, and violinist Joshua Bell.

The event raised $2.6 million, said Gary Parr, the Philharmonic’s chairman and a vice chairman at Lazard, addressing 770 guests including Antonio Quintella, chairman of Credit Suisse Hedging-Griffo Corretora de Valores SA; Gerald Hassell, chairman and CEO of BNY Mellon; as well as Wilbur Ross, Martin Gruss, Richard LeFrak and Joel Picket.

Woody Allen and Alec Baldwin, the artistic adviser of the symphony’s “Art of the Score” series, huddled in the center of the David H. Koch Theater’s promenade. Baldwin had introduced Martin Scorsese at the start of the program in Avery Fisher Hall, recalling how he cried when he heard he was cast in a Scorsese film, and cried more when he found out how much he was going to be paid.

Two Lovers

The program was one of the ways the Philharmonic is innovating, said its president and executive director, Matthew VanBesien. Rather than a montage of film clips, there were sweet-verging-on-trippy animations projected behind the orchestra, such as a postman walking on a pair of luscious lips (with music from “Il Postino"), and two lovers coming together and apart, then merging on the face of a red moon.

Parr said the the idea was to allow the audience to focus on the music of Frederico Fellini’s ‘‘La Dolce Vita’’ and Giuseppe Tornatore’s ‘‘Cinema Paradiso,’’ instead of showing footage that might distract from it. Still, a highlight of the program was live orchestration to a dance scene in Luchino Visconti’s ‘‘The Leopard.’’ Also, the pairing of Renee Fleming and Josh Groban for two romantic songs.

Parr sat for supper with Sandy Weill, chairman of Carnegie Hall and former chairman and CEO of Citigroup.

Alternative Assets

Parr said the Philharmonic has alternative assets in its endowment and its pension fund for musicians. Twenty-one percent of its pension fund was allocated to alternative assets as of August 2013, according to the orchestra’s 2012-2013 annual report.

As for which hedge funds: ‘‘It goes beyond statistical analysis,’’ Parr said. ‘‘We do that but we know the people, there’s trust and their track record.’’

Weill said the Calpers decision to divest from hedge funds is ‘‘a big deal. It questions the fees that people pay versus in a good market, the performance is not as good as just buying stocks. The hedge funds look very, very good in disturbed times, which will happen again. They’re probably getting out at the wrong time.’’

‘‘New Jersey’s done very well,’’ said Tom Kean, the state’s former governor. ‘‘As an investor, it’s not very smart to be totally out of hedge funds. No smart investor I know is out of hedge funds. So I don’t really understand” the California pension fund’s decision, he said.

More Retirees

Kean said pension funds need to generate higher returns to cover a growing pool of retirees. His experience as chairman of the Carnegie Corp. exposed him to the difficulties.

“When you pay 5 percent and inflation is 2 or 3, you’ve got to make at least 8 percent,” he said. “You’d better invest in things that do that, otherwise you’re losing. Calpers is in the same position. So I’d think a very diversified portfolio which to me includes some -- not a lot -- of hedge funds.”

Calpers is “making decisions that are not rational,” Benjamin M. Rosen, former CEO and chairman of Compaq Computer Corp., said. “In hedge funds there’s a spectrum of doing very well, so-so and lousy, as in every asset class. To withdraw from the whole class? Why do you want to narrow your options? What you should do is get rid of managers that are lousy, not managers that are members of a class.”

Benefit Concerts

Besides investing, the Philharmonic employs another strategy altogether to support its musicians’ pensions: holding Pension Fund Benefit Concerts, likely since 1910, said Barbara Haws, the Philharmonic’s archivist and historian.

The program for the 1945 concert, which is part of the Philharmonic’s online digital archives, noted that the annual cost to provide for retirement of musicians in the Philharmonic was about $70,000. It continued:

“The normal retirement age of musicians is sixty, except for wind instrument players, who, because of the greater physical demands on them, may retire at fifty-five.”

This year’s concert features Alan Gilbert, the Philharmonic’s music director, conducting Lang Lang on Oct. 21.

For something sexier, try Marion Cotillard -- the French actress who is a face of Dior -- in “Joan of Arc at the Stake,” June 11-13, 2015.

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