Barry Ritholtz, Columnist

The Reason Pension Plans Stick With Hedge Funds

They let politicians avoid making needed payments to retirement plans.

November 9, 2015 at 3:12 PM UTC

Updated on

November 9, 2015 at 7:33 PM UTC

Barry Ritholtz is a former Bloomberg Opinion columnist. He is chairman and chief investment officer of Ritholtz Wealth Management, and was previously chief market strategist at Maxim Group. He is the author of “Bailout Nation.”

The crisis ahead.
Photographer: Brendon Thorne/Bloomberg

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A new report poses an interesting question: “Would public pension funds have fared better if they had never invested in hedge funds at all?”

This is a subject we have investigated numerous times. The conclusion of the report confirms our earlier commentary: a small number of elite funds generate alpha (market-beating returns) after fees for their clients while the vast majority underperform yet still manage to overcharge for their services.