Billionaire currency trader George Soros warns against investing public pension money in hedge funds

DAVOS, Switzerland – Another leading figure in the financial industry is warning major pension systems to refrain from investing retirees’ money in hedge funds. In a meeting Thursday at the World Economic Forum, billionaire investor George Soros cited the management fees charged by hedge funds as saying it is unwise to direct billions of dollars of money from officials to such products. .

“The current market conditions are tough for hedge funds,” said Soros, who recently retired from his currency-focused hedge fund business. “Their performance tends to be equal to the average plus or minus 20% management fee. He said that while “you will always have hedge funds that will provide external performance … putting a big portfolio in a hedge fund is not a winning strategy.”

Public pension systems currently have about $ 470 billion in investments in hedge funds, according to data compiled by Prequin, a financial research firm.

Soros made his comments just months after Warren buffett issued a similar warning. A few months after Buffett’s remarks, the largest pension system in the United States, the $ 296 billion CalPERS, or California Public Employees’ Retirement System, made headlines in September ended most of its investments in hedge funds.

The CalPERS decision was seen as a potential trending factor. In October, San Francisco’s $ 20 billion pension system deposit a proposal to invest in hedge funds, and in December New York Governor Andrew Cuomo, a Democrat, vetoed legislation to increase the amount his state can invest in these high-risk vehicles.

The abandonment of hedge funds has now shifted to Europe. Earlier this month, the $ 184 billion Dutch public pension system abandoned its investments in hedge funds. A senior official said Reuters at the time: “With hedge funds, you are certain of the high costs, but uncertain about the return. “

In further remarks to the World Economic Forum, Soros urged world leaders to intervene with more force to challenge the regime of Vladimir Putin.

“Russia has become a mafia state in which the rulers use the country’s resources to enrich themselves and stay in power,” he said. “They preserve the outward appearances of democracy such as the holding of elections, but there is no rule of law or provisions for a legitimate transfer of power.”

Regarding Russia’s standoff with Ukraine, he said: “Ukraine should be able to defend itself militarily as long as Putin claims the separatists are acting on their own, but it urgently needs to. financial aid. I think Europe will react favorably … It all depends on the next few days. Not only the future of Ukraine, but also the future of the European Union itself is at stake. I think the loss of Ukraine would be a huge loss for Europe. This would allow Russia to divide and dominate.