Pension fund hypothecated art portfolio to satisfy arbitrary board liquidity rule
Matt Botein · Matt Botein – Flexible Investing and Institutional Challenges (Capital Allocators, EP.88) · Feb 25, 2019 · at 1:01:01
Matt Botein, co-founder of Gallatin Point Capital and former CIO of BlackRock Alternatives, discusses his biggest investment pet peeve: arbitrary institutional rules that force allocators into value-destroying financial decisions.
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“I used to encounter at BlackRock, we met a pension fund that had come to us for permission to basically hypothecate their entire art portfolio to Deutsche so that they could get an intraday liquidity facility because their board wanted them to be intraday liquid. It's a pension fund that's going to go and burn 50 basis points a year. Their pension needs return, because the board has set up some random rule which says, thou shalt be intraday liquid.”
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