CalPERS: “opaquely transparent”

One response to “CalPERS: “opaquely transparent””

1. 

   David Hartley

   July 26, 2012

   A “total” MER is practically impossible to determine. Money flows from individuals to individuals and anyone who takes payment along the way can be said to be taking a “fee” by whatever name. To get a total fee one would need to take into account the interest margin that a bank takes on loan, the underlying staff costs in listed companies, embedded fees in ETFs and a virtually limitless range of euphemisms for taking fees. Not to do so risks a victory of form over substance.
   For example, if a listed company undertakes trading activities and 50% of the gross profits are distributed to staff in the form of salaries and bonuses, why should this be allowed to appear as a zero fee relative to an “expensive” hedge fund that distributes, say, 20% of gross profits to staff in the form of salaries and bonuses? I am by no means suggesting that hedge funds are “cheap” but in this example the hedge fund actually offers a better share of the economics to investors.
   I have a solution to this conundrum but .. not enough space to detail it…

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