Magaziner wants more private-equity oversight

PROVIDENCE – General Treasurer Seth Magaziner wants more stringent regulatory oversight of private-equity investment expenses, saying the opacity of current standards puts Rhode Island in an unfavorable negotiating position.

Despite his concerns, however, strong returns on private-equity assets prevent the state treasurer from making any change to the allocation at the moment.

Magaziner, who oversees the state’s public pension known officially as the Employee’s Retirement System of Rhode Island, says about 8 percent is invested in private equity. The state’s pension fund had an overall 2.2 percent return in the fiscal year ending June 30, falling short of an internal benchmark of 2.47 percent, according to information from Magaziner’s office. The fund’s strongest-performing assets, however, were in private equity with a return of 5.5 percent, net of expenses.

But Magaziner said that private-equity firms could overcharge the state with convoluted fees that make it “very difficult for us to know what they charge.” •

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