Fido Bites The Hand That Feeds Him

Fidelity Investments EMPLOYEES are suing FIDELITY for breach of fiduciary duty by repeatedly adding "high-fee, actively-managed Fidelity mutual funds" with "little or no track record" to the Fidelity 401(k) plan.  Do I really need to explain how funny this is?  

The lead plaintiff and former employee, Lori Bilewicz, invested in the Fidelity Freedom 2040 fund within the Fidelity 401(k).  The class-action complaint by 26 current and former employees relates closely to my most popular blog post of all time from 2/15/2012: Fidelity Freedom Funds Aren't "Free" But Are "Dumb".  I would suppose any 401(k) plan using the Fidelity Freedom Funds will be interested in the outcome of this lawsuit. 

You can find more information about the lawsuit by clicking here.  
You can read the actual lawsuit complaint by clicking here. 

Wall Street Fees Explode in North Carolina's Pension Fund (I told you so)

The Triangle Business Journal reports "Fees Paid by Pension Fund Soar 28%" to $318 million last year. (see page 6 of the 2/1/2013 issue).  I hate to say it, but I told you so. Yep, we poor North Carolinian's, despite having several of the top MBA programs in the nation located in our state, and a huge financial center in Charlotte packed with investment talent, we can't seem to figure out how to manage our own pension fund investments.  Instead, we outsource management of the fund at a current annual expense of $318 million.

To put the $318 million of external manager fees into perspective, just consider that over the next 10 years North Carolina will pay Wall Street more than $3.18 billion in investment fees.  Given the growth rate of the fees are greater than the growth of the fund, it will likely me MUCH more than that.  We should bring the money home and manage it ourselves right here in North Carolina and save ourselves billions of dollars.

According to pages 24-25 of the latest annual report, last year teachers contributed $830 million of their pay checks to this pension fund while other state employees added an additional $333 million for a total of $1.16 billion.  The State Treasurer's Office takes 27.3% of state employee and teacher contributions and gives it to Wall Street EVERY year.  A ridiculous waste of state pensioner money. 

Finance Clippings: Private Equity Fees

Another great post from Dr. Richard Warr at NC State.

Finance Clippings: Private Equity Fees: There's been much talk about Private Equity recently. Yesterday, an article in the FT (behind paywall) talked about the fee structure u...