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C. Eugene Emery Jr.
By C. Eugene Emery Jr. November 3, 2013

R.I. General Treasurer Gina Raimondo says Providence invests more of its pension money in hedge funds than the state does

Rhode Island General Treasurer Gina Raimondo has come under fire because, on her recommendation, the State Investment Commission, in 2012, put more pension money in hedge funds.

Critics say the funds, which are designed to retain value or increase in value for large investors when the overall market is performing poorly, are risky and charge exorbitant rates.

On Oct. 21, after a report commissioned by the largest state employees union accused Raimondo of selling out Rhode Island's public workers and retirees for an "opportunity to enrich herself and her hedge fund backers," Raimondo sent out a fundraising letter trying to put the investment strategy in perspective.

One portion focused on Providence's pension fund, overseen by Mayor Angel Taveras, a declared candidate for governor who is expected to face Raimondo in a Democratic primary.

"Providence has more of its pension fund invested in hedge funds and is less transparent – and yet isn’t included in the [union-financed] report because this is about attacking one individual and a comprehensive reform," she said.

We wondered whether her points about hedge funds and transparency were accurate.

Looking at how much each fund is investing in hedge funds, the most recent monthly numbers show that, as of Sept. 30, Raimondo is correct on a percentage basis.

The report, available on the treasurer's website, says 14.2 percent of Rhode Island’s $7.8 billion retirement account is invested in hedge funds.

In Providence, hedge funds on Sept. 30 made up 16.6 percent of the $241 million in Providence's retirement account, according to a city report. That's nearly two and a half percentage points higher than the state’s ratio.

However, when Providence made part of its annual required pension contribution nine days later, that percentage dropped to about 14.3 percent, virtually identical to the state ratio. (The value of the hedge funds hadn’t declined, only their percentage of the overall fund.  When the city made the rest of its annual contribution, the ratio dropped to 13.2 percent, according to city spokesman David Ortiz, who noted that Taveras is trying to move away from hedge funds while Raimondo has embraced them.)

So whether Raimondo is correct or not depends on when you look.

Raimondo's office said her fundraising letter was based on a May 8, 2013, blog post at, which reported that Providence had just under 20 percent of its pension money invested in hedge funds at a time when the state's ratio was 14.6 percent.

"The media report from May 2013 was the only information that we could publicly find regarding Providence’s investment allocation to hedge funds," said Collin Berglund, spokesman for Friends of Gina Raimondo.

That has changed.

After Raimondo made her comment and PolitiFact called Providence to check it on Oct. 23, the city posted more of its retirement fund data online, including the Sept. 30 numbers and an Oct. 22 tally that included the $33 million infusion of cash from the city that made hedge funds an even smaller slice of the retirement pie.

Which brings us to the issue of transparency.

Raimondo's office has bragged about its openness because detailed information about the investments is posted on the general treasurer's website. Raimondo has also, for the first time, included information on the hidden fees that some funds charge the state and most states don't report.

City spokesman Ortiz responded in an Oct. 24 email: "Reports prepared by our pension investment advisers have always been provided to the media without any redaction, and are now publicly available on the city’s open data portal:" He said that Raimondo has denied public records requests and redacted "key data" regarding fees and performance for some investments.

He did not respond when we pressed him for specifics. But earlier this year, Raimondo’s office denied a request by The Providence Journal to see certain details that each hedge fund gives to the state, saying it is bound by contractual confidentiality agreements. An Aug. 4, 2013 Journal story reported that much of that information was redacted from documents Raimondo’s office provided to the newspaper.

When we asked Raimondo's office about Ortiz's allegations about disclosure, spokeswoman Joy Fox said in the few instances where information has been withheld, it had to be kept secret to avoid violating contracts.

We found some hedge fund report information on the Providence website that seemed to offer more detail than what Raimondo offered, but it's not clear whether the report was available before PolitiFact began inquiring about Raimondo's claim about openness.

Our ruling

Rhode Island General Treasurer Gina Raimondo said Providence has more of its pension fund invested in hedge funds than the state does and is less transparent about it.

Based on the Sept. 30 financial statements, the first part of Raimondo's statement would have been true. The city had 16.6 percent of its pension money in hedge funds, compared with the state’s 14.2 percent.

That's no longer true because Providence subsequently made its annual pension payment, increasing the proportion of non-hedge fund investments. But that information was not public at the time Raimondo made her statement.

On the issue of disclosure, the city has released pension information when asked, but there’s much more pension information -- particularly historical information -- widely available to the public on the state’s website.

Raimondo’s statement was accurate on Sept. 30, but recognizing that a key element had changed by the time she made it on Oct. 21, we rate it Mostly True.

(If you have a claim you’d like PolitiFact Rhode Island to check, e-mail us at [email protected]. And follow us on Twitter: @politifactri.)

Our Sources, "Taveras invests 20% in hedge funds, more than Raimondo," May 8, 2013, accessed Oct. 23, 2013

Interviews and emails, Joy Fox, spokeswoman, General Treasurer Gina Raimondo, and David Ortiz, spokesman, city of Providence, both Oct. 23-31, 2013, "State Investment Commission Monthly Meeting Reports," and "Employees' Retirement System of Rhode Island Investment Expense Analysis," accessed Oct. 23, 2013., "10-22-13 City Of Providence Employees' Retirement System - Current Investment Position And Performance Estimate," Oct. 22, 2013, accessed Oct. 24, 2013, "6-30-13 City of Providence Employees' Retirement System - Current Investment Position and Performance Estimate," Sept. 6, 2013, accessed Oct. 31, 2013, and "Hedge Fund Statistical Analysis," May 23, 2013, accessed Oct. 31, 2013

The Providence Journal, "'Forensic investigation' financed by union blasts Raimondo's handling of R.I. pension fund," Oct. 17, 2013 and "In hedge fund world, transparency takes a hit," Aug. 4, 2013

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R.I. General Treasurer Gina Raimondo says Providence invests more of its pension money in hedge funds than the state does

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