Disclosures “contrary to the public interest”

As often happens , my conversations surrounding previous postings attract the attention of people better qualified to write the post. In this case Peter Drewienkiewicz, Chief Investment Officer at consultancy Redington.

Here he is responding to a post of mine on Linked in

You can read the blog which I published using this table here

and you can read the source of the table (PPI’s DC default strategy paper) here

This is how I learn and how social media works, and doesn’t  work.

No sooner had I read (and liked) Peter’s comment, than I read (and liked) news  that the American SEC, Wall Street’s top regulator is seeking to compel hedge funds and private equity groups to disclose quarterly performance and fees charged to investors, as the agency pushes back against activities it warned were “contrary to the public interest”.

Revisiting the source of the table Peter called out, I see that he is right and that the Black Rock numbers are not what people “get” but what the private equity fund managers would like to think we’d get. It is in the public’s interest to know what they are getting.

This is no trivial matter, misrepresenting the value of illiquid investment as these figures seem to do , is absolutely against the public interest.

We think we have strict rules on disclosure in the UK. For many asset classes we do have. But , as the one American commentator points out to the FT

“This is a path-breaking moment for the SEC. They are making a concerted effort to get their arms around the massive growth of private markets especially over the past decade and to provide investors with the information they need to make sensible decisions,”

The work done by Dr Christopher Sier and others in the UK to make available similar information to private investors is worth note. Chris is constantly reminding me not to take disclosures at face value and it is good that I now have Peter calling me out too.

It was no easy matter finding the source of the data.  Following the path for this information on the link from PPI  initially solicits a 403 error.

However, after reconfiguring the link..

I get, after several attempts to this URL which actually works.


Which takes me to the chart from which PPI have drawn their information. Note the title.

Under which this warning appears

This information is not intended as a recommendation to invest in any particular asset class or strategy or as a promise – or even estimate – of future performance.
Source: BlackRock Investment Institute, November 2021. Data as of 30 September 2021.
Notes: Return assumptions are total nominal returns. U.S. dollar return expectations for all asset classes are shown in unhedged terms, with the exception of global ex-US Treasuries and hedge funds. Our CMAs generate market, or beta, geometric return expectations. Asset return expectations are gross of fees. (my bold)

I hope that everyone reading this understands that fees of 5-6pc pa , are Pete’s estimate of the amount we pay for Private Equity management and these do not compare to the fees we pay for accessing listed US equities (for instance).

To repeat Pete’s point, the Private Equity expectations are inflated because they do not take into account of fees which are much higher in private than public markets.

Who do you trust?

BlackRock are one of the largest institutional fund managers in the world, they are regulated in the States by the SEC and in the UK by the FCA. The PPI is Britain’s  most respected source of pensions information.

I am quite sure that BlackRock did not publish an uncompliant table.  I have now found, in the smallest of print, the reference to the returns being quoted gross of fee

So long as the private markets continue to promote themselves using gross numbers which do not represent actual returns , we are vulnerable to false expectations.

So thank to the real expert, Peter and to those like him (Chris) for maintaining an arms length relationship with the investment super powers.



About henry tapper

Founder of the Pension PlayPen,, partner of Stella, father of Olly . I am the Pension Plowman
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1 Response to Disclosures “contrary to the public interest”

  1. Con Keating says:

    There are some surprising characteristics to those expected returns figures – if private equity has an annual mean of 15.3% and volatility of 29.3% we expect the long-term geometric return (say 20 years) to be 4.29% lower – so 11.0%. but it is reported as 15.3%.

    The effect of performance fees on the distribution of return is also interesting. With gross returns distributed as N(15.3, 29.3) and a performance fee of 20% of positive returns we see two very different results. The mean of the post fee distribution is 11.18% and the median 12.2%.

    The real problem is that government here has bought into the high returns from private equity story – with things such as the Wyman British Business Bank report claiming 18% returns and negligible volatility. Iain Clacher and I looked at that study and at private assets more generally in our response to the charge cap consultation – it can be downloaded here:


    Appendix C of that report reviews critically the Wyman / British Business Bank report.

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