Wednesday, December 13, 2017

Nashville's fees to Wall Street among highest in the nation

In an article by Mike Reicher appearing in The Tennessean it is reported that Nashville's pension fund pays some of the highest Wall Street investment fees of any city in America. The hidden cost associated with the pension fund was revealed for the first time as a result of a request for information from the Tennessean. Below are excepts from the article:

New city data shows that Nashville paid $39 million in investment fees in fiscal 2017 — more than 40 percent above the previous year’s reported fees — while the fund’s assets increased by 10 percent. As a share of its total assets, Nashville’s fees are among the highest in the nation, experts say.

The city pays nearly as much in investment fees as the state pension fund, which has more than 10 times the assets of Nashville and better investment returns during the past decade. 

While other local governments have taken steps to control Wall Street fees, Nashville officials show no indication they’re concerned.

Metro paid fees equal to about 1.3 percent of its assets in fiscal 2017. Pew surveyed the largest state pensions and found the average external management fee was 0.34 percent. The Tennessee Consolidated Retirement System, the pool for local and state employees, spent $41 million on external management fees, or 0.08 percent of its assets. 

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