When the state Investment Commission recently made the decision to pull out of one fund it was investing in, the choice was evaluated in the public sphere not by using the tools of the trade, but rather using a political lens.
The real issue here is how to reduce the risk that the state pension funds have while keeping returns at levels that help pay off the state’s obligations and build the funds up. By taking money from one hedge fund – which by definition is supposed to offer returns that are countercyclical in nature – and giving it to another not so closely aligned with the overall market performance, the commission made a prudent call.
Even if the returns in the past year were tremendous, this choice put long-term balance and pensioner needs ahead of chasing short-term gain.
Unfortunately, the public got a lot of hot air and not a lot of light about whether the decision was motivated in order to mend fences with one political constituency.
If the state wants its leaders to make the right choices, then those wanting to be its leaders should ask the right questions. •