(March 13, 2014) – The second edition of the American Federation of Teachers’ (AFT) asset manager “watch list” has five fewer firms named than the 2013 publication, which details firms that the union says have ties to anti-pension groups.
That’s because the first list worked, according to the AFT.
“Since the American Federation of Teachers released the first ‘Ranking Asset Managers’ report in April 2013, several Wall Street firms have cut ties with groups leading the attack on workers’ defined benefit pension plans,” the union wrote in its latest report.
AQR, Dimensional Fund Advisors, and KKR were among the asset managers targeted in 2013 that have since moved out of the union’s bad books.
However, asset management and consulting giant Aon was a new member, and one of the largest firms listed. AFT attributed the inclusion to the Aon Foundation’s support of the Commercial Club of Chicago, an advocate for charter schools and pension reform.
Aon’s corporate charity made three donations to the organization totaling $110,500 in 2012, according to filings with the Internal Revenue Service. The philanthropy distributed more than $9 million that year, much of which supported post-secondary institutions.
Highbridge Capital Management, another high profile new entrant, landed on the list for its CEO’s support of education reform group StudentsFirst. Glenn Dubin, co-founder of the $25 billion hedge fund now owned by JP Morgan Asset Management, made a $150,000 donation last February.
StudentsFirst's policy agenda said that the group lobbies for US states to "honor their existing obligations to defined benefit pension plans" but also "move from defined benefits to retirement plans that are more sustainable and can be immediately accessed by all teachers.”
The organization’s New York branch was partly founded by a two-time member of the union’s watch list: Third Point’s Dan Loeb.
After being named in the inaugural report last year, Loeb canceled an appearance at the Council of Institutional Investors’ conference and pushed back in a letter to its chair. He cited "incorrect statements about my position on the issue of defined benefit pension plans" which had "derailed" the "critical conversation we planned to have about improving corporate governance."
"Contrary to reports," he continued, "I have never taken a position against defined benefit plans nor has any philanthropic organization I lead. In fact, my support for and contribution to defined benefit plans is demonstrated by maximizing returns for union members who rely on us to deliver their pension goals."
The AFT’s attempts to smear entire organizations for a single executive’s personal leanings have left many industry types uncomfortable.
The chair of one public pension system characterized the AFT’s actions as “tyrannical” during a conversation with aiCIO. The trustee also noted the irony of hedge fund managers being punished for supporting reforms that would, if successful, shut off a major source of investor capital.
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