Treasurer Torsella Praises PSERS Move to Fire Wall Street Managers

Pension fund to fire several underperforming managers; Torsella has advocated for reduction in risky high-fee investments at fund

Harrisburg, PA - State Treasurer Joe Torsella today issued the following statement, after a recent commitment by the Pennsylvania Public School Employees Retirement System (PSERS) to pull approximately $2 billion from expensive and underperforming Wall Street money managers. The move comes after years of strong advocacy by Treasurer Torsella to move away from so-called “risk parity” hedge funds and other expensive “alternative” investments, and to consider lower-cost and more transparent investment options.

“I commend this recent move by PSERS, which shows that when we work collaboratively to better protect and grow the funds committed to our teachers and other beneficiaries, we can make substantial progress.

It’s time that more pension funds wake up to the fact that Wall Street has, in many cases, sold them something close to modern-day snake oil. We know what markets will do: they will go up and they will go down. What so many active Wall Street managers have sold our nation’s pension funds on is the idea that—for a hefty set of fees—they can help pensions experience almost all of the gains and none of the losses. We need to recognize that for the fantasy it is.

In so many cases, what ends up happening is that the Wall Street managers do worse than fail to deliver value, they end up delivering an expensive failure. But even after losses, those high fees stay in the pockets of the money manager, not where they belong, in the pockets of our teachers. PSERS’ recent experience with these funds teaches that expensive lesson once again.

This move by PSERS is worthy of substantial praise, and shows that Pennsylvania doesn’t have to be at the mercy of expensive and under-performing Wall Street managers. We can lead the nation in standing up for our beneficiaries, standing up to Wall Street, and stop the fleecing of our pension funds and taxpayers."

Pennsylvania State Treasurer, Joe Torsella

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