Pension Funds Boosted By Oil While Stocks Fall, Commodity Bets Are Paying Off
By David Cho Washington Post Staff Writer Monday, July 7, 2008; A01
Soaring fuel prices that are burning a hole in the wallets of consumers are not only benefiting oil companies and Middle Eastern producers. They are also lighting up the investment returns of pensions funds, which millions of ordinary Americans are counting on for their retirement.
California's public employees' pension fund, the world's largest, made its first investment of $1.1 billion into oil and other commodities early last year, and since then, Calpers has seen it soar 68 percent. Fairfax County pension managers have enjoyed a 61 percent return from a similar move over the past 12 months, far outpacing any other segment of the fund's portfolio.
"Our commodity investment has really helped," said Robert L. Mears, executive director of Fairfax County's Retirement Administration Agency. "This year would have been a lot worse."
Other pension funds are rushing to get in on the action as the prices of oil, precious metals, corn, uranium and other vital goods continue to reach record highs. Montgomery County officials are in the process of shifting 5 percent of their $2.7 billion pension fund away from stocks and into commodities.
Well Robert, fasten your seat-belt because 'this year' isn't yet over and fund managers like yourself are about to get their clocks cleaned--along with the hapless someday-hoping-to-retire (under your care) who will be broke.
We're about to witness an object lesson in why George Bush's plan to tie social security to the stock-market was absurd.
Hedge funds are only open to the rich, but somehow 'the rich' have been redefined as congregations of the less than rich--retirees, with every penny entrusted to guys like Bob Mears. Commodity derivatives--as unregulated as sub-prime mortgage investments--are the current Wall Street feeding frenzy.
That frenzy has put half the planet at risk and now is poised to shear the sheep of the other half, including American pension trusts.