Home Banking & Finance California county quits Bridgewater fund citing excessive fees

California county quits Bridgewater fund citing excessive fees

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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.

BridgewaterThe 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.

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