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Thursday, October 5, 2017

Magaziner continues to pull RI money from hedge funds

More than half a billion withdrawn while pension fund returns grow

Related imageRhode Island General Treasurer Seth Magaziner announced his office's redemption from seven hedge funds has topped $500 million as the implementation the Treasurer's Back to Basics investment strategy reaches the one-year milestone.

"My Back to Basics strategy is getting the pension system healthy in order to provide retirement security for those who have dedicated their careers to public service and bring more stability to Rhode Island's finances," said Treasurer Magaziner.

Since October 2016, the Treasurer's office redeemed positions with Ascend Capital, Brevan Howard, Brigade Capital Management, Emerging Sovereign Group, Partner Fund Management, Samlyn Capital, and Och-Ziff management.

The move away from hedge-funds was a part of Magaziner's Back to Basics investment policy which found that high-fee hedge funds had underperformed, despite commanding high fees. Under Back to Basics, most of the state's previous hedge fund investments were abandoned in favor of more traditional investment strategies.

The $8.17 billion Rhode Island Pension Fund has earned more than $840,000,000 in investment gains in the 12-month period ending August 31, 2017. This 11.27% return beat the plan's own benchmark of 10.95%, and outperforms a traditional 60% stock/40% bonds which would have returned 10.21% over the same period.