Give that man a gold star!

Who says all the savviest institutional investors are at endowments and foundations? I'm beginning the think the reverse is possible given how much risk the large "sophisticated" E&Fs are taking (fully hedged, uncorrelated, alpha, whatever...). And a voice of wisdom has emanated from a public pension plan of all places. As reported in Fund Fire last week:

Alternative assets may not be the portfolio diversifiers they’re thought to be, Rhode Island’s deputy general treasurer for finance told an audience last week. Speaking at the annual Fire and Police Pension Fund Summit in his home state, Kenneth Goodreau warned that allocating to alternative classes might not end up reducing a portfolio’s overall volatility, as common opinion holds.

Bravo Kenneth! Couldn't have said it better myself.

“If you look at alternatives right now, the asset classes are moving in tandem. We’re basically dealing with a global liquidity pool where everybody’s looking for the same thing,” Goodreau said. “The more people you get on the same side of an asset, the riskier it gets.”

“The real asset class I’m looking for is non-correlated,” Goodreau said, “and it’s very difficult to find.”

Who needs David Swenson? For investment wisdom you could do a lot worse than go to the Rhode Island Fire and Police Pension Fund Summit!