Trillions in Retirement Dollars Flow into Opaque Trusts

kkoolhead17 about 4 hours ago 12 commentsRead Article on bloomberg.com

FR version is available. Content is displayed in original English for accuracy.

⚡ Community Insights

Discussion Sentiment

75% Positive

Analyzed from 592 words in the discussion.

Discussion (12 Comments)Read Original on HackerNews

metadat•about 4 hours ago

https://archive.today/8jwJl

cowsandmilk•about 3 hours ago

This article feels overblown.

Here’s a trust that has 250 billion, but reports prices and does many other things the article says isn’t required: https://workplace.vanguard.com/investments/product-details/f...

Not opaque and it has lower fees than the retail S&P 500 funds.

hammock•8 minutes ago

Yes I don’t get the worry on an individual basis. If my money is in a CIT they tell me exactly what it’s invested in and it is audited every year.

The worry here seems to be on a systemic level, rather. No one knows how much in aggregate is in these types of trusts nor how it is in aggregate allocated. Which may be a concern from a systemwide risk management pov but far less so for an individual worker.

bombcar•about 2 hours ago

Using Vanguard anything as a counter-example isn't terribly persuasive; they're unique in the market.

cowsandmilk•about 2 hours ago

Given the Bloomberg article explicitly calls out Vanguard, I don’t think using it as a counter-example is inappropriate.

jancsika•35 minutes ago

In the context of the article, this type of trust you linked has got to be the special case of all special cases.

Since that trust is tracking the S&P 500, it has to be literally equivalent to its VOO ETF counterpart. If it ever rebalanced in a way that no longer tracked the S&P, or even mysteriously changed disclosure in some way, investors would dump it the next day (for an index fund that is literally the same except for expense ratio and disclosure rules).

Moreover, everything in that trust is quite obviously publicly traded companies. The article is about retirement funds gaining access to private markets[1].

tldr; this ain't that.

1: clarification edit. Also, my gut tells me I should have written that as "private markets gaining access to retirement funds" but I really don't know enough about it.

darth_avocado•about 1 hour ago

There’s a really good video of how retirement accounts have become wall street’s favorite piggy bank to borrow from. TLDR; the money rewards bad behavior because governments are too scared to let people’s retirement accounts collapse.

https://youtu.be/aRLxcx79OvE

jpadkins•about 1 hour ago

whenever I see headlines like this, I always think: great opportunity for someone to create transparent trusts then?

am I super biased or fully drank the Kool aid if I believe entrepreneurs are the solution to many of society's ills?

gipp•about 1 hour ago

For everyone but the individual account holders (who have ~no voice in this market) the opacity of the trusts is a selling point, isn't it?

forgetfreeman•about 1 hour ago

If entrepreneurship is the solution to society's ills why don't entrepreneurs solve societal problems? (note this criticism is equally effective when pointed at non-profits)

SoftTalker•2 minutes ago

If there were profit in it, they would.

Society's ills tend to concentrate around people with no money or resources. There's no profit to be had solving their problems, so entrepreneurs are not interested.

Non-profits on the other hand, depend on the existince of the problem to justify their own existence. So they are not well-motivated to solve those problems, quite the opposite in fact.

0xbadcafebee•about 1 hour ago

> The worry is that vital investor protections are being sacrificed in pursuit of lower costs and lesser oversight. Those concerns are likely to grow as CITs look set to become the go-to vehicle to add more private market exposure to retirement plans. The Trump administration is laying the groundwork for 401(k) investors to get easier access to assets that don't trade regularly, like real estate and private equity.

> In addition, Congress is proposing a path to let CITs gobble up even more of America’s retirement savings. A current move by US lawmakers to allow the pots of public school and nonprofit employees into the trusts has been described by one member of Congress as “the single largest deregulatory action we have seen in years.”

This is corruption in action. Corrupt leaders are quietly attempting to make a profit off of citizens' retirement plans, with no plan to protect those citizens once the market inevitably implodes.

lotsofpulp•about 1 hour ago

Defined benefit pensions are the perfect vehicle for corruption, and taxpayer funded ones 10x so.

smarm52•43 minutes ago

> Fixed income collective trust funds typically invest primarily in various types of debt instruments, such as treasury bonds, treasury bills, corporate bonds, sovereign government bonds, secured and unsecured loans, and different types of derivatives based on these instruments.

There were some issues with that in The Great Recession: https://en.wikipedia.org/wiki/2008_financial_crisis.

> Disadvantages include less transparency than traditional mutual funds, difficulty tracking performance, and less oversight of management.

So less verifiable.

That's just what you want to see related to money that millions depend on for retirement. /s

https://en.wikipedia.org/wiki/Collective_trust_fund