The number of complex investment tools has exploded over the last several decades. Hedge funds, which have skyrocketed since the 1990s, are one such tool. They’re called hedge funds—in the sense of hedging your bets—because, unlike more traditional investment options, they can bet against the market and, in theory, make profits even if stock prices are dropping across the board.
This promise of a safeguard against the whims of the market is especially attractive to large, institutional investors, like public pension funds and university endowments—groups that want a steady rate of return. Not only has this promise proved false during bad times, but hedge funds have proved a mediocre investment during good times too. Poor returns combined with exorbitant fees have cost universities and public employees billions of dollars.
The total value of public employee pension funds in the United States is $4.7 trillion. That’s money that supposedly belongs to workers, but labor often has little-to-no say in how employee pensions are invested. In fact, most of this money is funding the same corporations and financial institutions that have been aggressively attacking the interests of working people for decades.
– In These Times