Chicago Tribune: Worries grow over pension investments in hedge funds (a new Enron?)

[Omaha Steve]

http://www.chicagotribune.com/business/investing/personalfinance/chi-ym-hedge-0520may20,0,4249654.story?coll=chi-businessyourmoney-hed

Worries grow over pension investments in hedge funds

By Jonathan Peterson, a staff reporter for the Los Angeles Times, a Tribune Co. newspaper
Published May 20, 2007

When the hedge fund Amaranth Advisors LLC flamed out last year after disastrous bets on energy prices, San Diego County's retirement fund was among those burned. Losses to its portfolio were estimated at $100 million.

The episode is unlikely to stem the rising tide of pension dollars into hedge funds. It has, however, raised concerns about the safety of retirement money and stirred debate on whether more oversight is needed.

"Amaranth is a glaring example of the loss that can take place and the risk that exists when public pension systems invest in hedge funds," said Lani Lutar, president of the San Diego Taxpayers Association."At the end of the day taxpayers could be left holding the bag."

Hedge funds utilize an array of trading techniques to pursue lucrative returns, sometimes shifting strategies with dizzying speed and often using debt to enhance the payoff. Retirement plans, facing burdensome financial obligations in the future, will have nearly $200 billion in these funds by 2010, said Daniel Celeghin, associate director of consulting firm Casey, Quirk & Associates.

This may prod some retirees to keep an eye on how their pension money is being invested and to examine whether new risks are entering the picture. Getting the information may take effort -- and some funds make it easier than others.

Big public pension funds typically offer investment information on their Web sites.

FULL story at link.