Monday, 28 July 2008

Investing in infrastructure

There's a very interesting post about infrastructure investment over on Capital Matters. The SEIU (the most active US union in terms of capital stewardship) has recently trailed the idea that the unions and/or public sector pension funds might set up their own investment vehicle to avoid getting fleeced by existing offerings with 2 & 20 fee structures (2% annual management charge plus 20% of performance). Now it seems that things might be moving forward:

Public pension funds, governors, state treasurers, comptrollers, and the Service Employees International Union (SEIU), whose members participate in pension funds with more than $1 trillion in assets, have begun preliminary discussions about how to create this type of investment vehicle.

PS. On the fees issue I've just been reading Watson Wyatt's Defining Moments report which has quite a bit of interesting stuff in it for a relatively short report. They state quite clearly that pension funds are wasting an ever greater amount of money through investment costs, and suggest that there might be a backlash over fees in the future. I'll write it up shortly.

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