Recently Pando Daily broke a story about Governor Christie’s Administration violating pay to play laws by rewarding political donors with New Jersey Pension Fund contracts. The gist being that after General Catalyst employee Charles Baker donated money to the NJ GOP, General Catalyst received roughly $15 million to invest on behalf of retirees.
While the focus of the story was on violations of New Jersey’s pay to play laws, another facet of the scandal worth exploring is the increasing role alternative investment vehicles like General Catalyst – which is a venture capital firm – play in managing pension wealth. Private equity and hedge funds have begun to play an increasing role in pension investments as a recent Pew study points out.
The previously boring and safe strategy of buying government and top tier corporate bonds has been supplanted by the high flying big risk strategy of hedge funds.