The search for yield, fueled by the Fed's low interest rates, is forcing investors into higher risk investiments, including hedge funds, private equity firms and other so-called “alternative investments." As noted here and here yesterday, hedge fund managers are profiting to an insane extent, and needless to say, are "encouraging" more of this mis-allocation of funds into their coffers.
Documents contradict Blackstone CEO’s boasts about high-fee alternative investments
Yesterday Pando reported on secret documents showing that Wall Street behemoth Blackstone was quietly charging enormous fees to public pension funds.
We didn’t specifically contrast the firm’s record with the public declarations of the firm’s CEO, Stephen Schwarzman. However, that’s something worth doing — especially considering Schwarzman’s recent comments defending the controversial high-fee investments that his firm oversees.
Before getting to those statements, recall that Schwarzman is the same CEO who infamously insisted that increasing taxes on the wealthy is “like when Hitler invaded Poland in 1939.” Recall, too, that Schwarzman is famous for throwing himself a $3 million birthday bash and for his generally opulent lifestyle. With the Wall Street Journal reporting that “about $37 of every $100 of Blackstone’s $111 billion investment pool comes from state and local pension plans,” that lifestyle is effectively supported by public employees’ retirement nest eggs.
Because of Schwarzman’s headline-grabbing flamboyance, his incendiary rhetoric and his status as a billionaire, the Blackstone chief has developed a prominent platform, and in recent days, he has used that platform to try to shape the debate over Wall Street’s high-fee firms. Indeed, during a conference last week, he urged individual investors to follow public pension funds in putting more of their savings into hedge funds, private equity firms and other so-called “alternative investments.”
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