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August 25, 2019Cart

Business

by Fairfield County Business Journal
by FCBJ

California county quits Bridgewater fund citing excessive fees

The pension fund for California’s San Joaquin County is withdrawing its money from Bridgewater Associates’ Pure Alpha II fund amid charges that the Westport-based hedge fund charged excessive fee and generated mediocre returns.

The pension fund covers more than 13,000 current and retired county employees. According to a Bloomberg report, San Joaquin’s decision to shift its entire $81 million out of Pure Alpha II first took root in November 2017 when Pension Consulting Alliance, the country’ consultant pointed out a problem with the fund: Although it was posting annualized returns before fees of 6.9 percent for the five-year period ending Sept. 30, 2017, Bridgewater took a fixed fee of 3.69 percent and the pension fund wound up with only a 3.1 percent annualized return.

Last January, Bridgewater sought to maintain the county’s investment, insisting in a letter to the county officials that it was “critical to look beyond three- or five-year performance to the underlying quality and consistency of the investment process and what to expect from it over full market cycles.” Bridgewater did not issue a public comment on the latest development.

However, San Joaquin has not completely quit Bridgewater; it will maintain its investment in $186 million in Bridgewater’s All Weather risk parity fund.