You have read for years that Your Survival Guy is worried about the risky bets being made by state pension fund managers who, after politicians overpromise and under-fund for state employee retirements, are left chasing performance to fill in the gaps. One way states have attempted to juice performance in pension funds is by allowing them to invest in private equity. The problem is that these investments are often riskier than what’s available on public markets and don’t always turn out well. Missouri is the latest state to find out that riskier investments in private equity can come back and bite pension funds. This time, the private equity fund was one run by BlackRock, and was partially invested in the recently collapsed cryptocurrency exchange, FTX. The Kansas City Star reports:
The Missouri State Employees’ Retirement System lost roughly $1 million because a private equity firm it invested in was invested in FTX, the embattled cryptocurrency exchange that filed for bankruptcy last week. T.J. Carlson, the pension fund’s chief investment officer, informed the retirement system’s board of the loss on Thursday, Missouri Treasurer Scott Fitzpatrick and another source familiar with the investment told The Star Friday.
Fitzpatrick is a member of the board because of his role as treasurer. He was elected Missouri auditor last week.
Fitzpatrick and the other source identified the private equity firm as BlackRock, a New York-based asset management firm, and said BlackRock had invested some of that money in FTX. The amount lost won’t affect MOSERS’ ability to pay pension benefits, Fitzpatrick said.
Candy Smith, a spokesperson for MOSERS, said in an email to The Star Friday that the system had roughly $1.2 million of exposure to FTX when the crypto company filed for bankruptcy. Smith said the loss is an estimated .01% of the MOSERS total portfolio exposure.
A representative from BlackRock declined to comment Friday.
You no doubt remember BlackRock from everything Your Survival Guy has written on the company’s ESG efforts, where you invest, and they win.
- EGO: BlackRock CEO Goes Woke with Investor Money
- BLACKROCK’S BITCOIN-ESG PARADOX: You Can’t Have It All
- BLACKROCK’S BILLIONS: Guess Where Those ESG Fees Are Going?
- THE UNWOKENING: Corporate Executives Signal Big Step Back on ESG
- Your Survival Guy Never Buys ESG Funds Ever
- EXPOSED: ESG’s Biggest Con Explained
And FTX has been in the news quite a bit:
- Remember This from FTX Bankruptcy and You Can Thank Yourself Later
- CRYPTO CHARLATANS: Investors Lulled to Sleep by Celebrities, Influencers
- CRYPTO: A Generational Reality Check that Markets Are Cruel
- Cryptocurrencies Tumble as Owners Lose Faith in Institutions
- SECRETLY INSOLVENT: Crypto Exchanges Hiding Their Troubles
Action Line: Don’t run your personal investments like pension fund managers are running them for so many state employees. You don’t want to have to rely on the market to do something for you. You want to keep what you earn. Sometimes it’s more about the return of assets than the return on assets. If you need help, let’s talk. In the meantime, click here to subscribe to my free monthly Survive & Thrive letter and get to know me better.
E.J. Smith - Your Survival Guy
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