But I have never seen the case of an alternative investment going to zero value as in this case.From the WSJ
From $2 Billion to Zero: A Private-Equity Fund Goes Bust in the Oil Patch
EnerVest’s collapse shows how debt taken on during the drilling boom continues to haunt energy investors three years after a glut of fuel sent prices spiraling down.
I would think that many of those invested in the fund didn’t understand the amount of leverage in the fund. Some form of leverage is involved in virtually every major investment disaster. No unleveraged investment goes to zero.
The fund was popular among charitable organizations as well. The J. Paul Getty Trust, John D. and Catherine T. MacArthur and Fletcher Jones foundations each invested millions in the fund, according to their tax filings.
Michigan State University and a foundation that supports Arizona State University also have disclosed investments in the fund.
The WSJ noted another loser
Orange County Employees Retirement System, already has marked its investment down to zero, according to a pension document.
The bottom line is the one that Calpers concluded: alternative investments are not worth the additional risk....and that is' conventional " hedge funds and private equity funds which were the alternatives Calpers had invested in. How much more could the case be made against alternative investments when they involve complex leveraged strategies. But it seems there is always someone who lets his greed and overoptimism lead to venturing into exotic investments In this case the results were as bad as possible...the investment going to zero.