Pension Fund Exit from Hedge Funds Sparks Debate

17 Sep

Pension Fund Exit from Hedge Funds Sparks Debate

Is the thirst for “alternative” investments, which became unquenchable during the stock market downturn in 2008-09, drying up? That’s the big debate after a giant pension fund announced that it’s dumping all its hedge fund investments.

CalPERS announced after the market closed Monday night that it was exiting all of its hedge fund investments in a move it said was to reduce the complexity of its investments as well as costs.

The California Public Employees’ Retirement System — which manages close to $300 billion and invests pension savings for 1.6 million members, including cops, firefighters and other public workers,  said it will exit 24 hedge funds and six hedge fund-of-funds valued at approximately $4 billion.

In a statement, Ted Eliopoulos, CalPERS interim chief investment officer, said. “Hedge funds are certainly a viable strategy for some, but … when judged against their complexity, cost, and the lack of ability to scale at CalPERS’ size,” investing in hedge funds “is no longer warranted.” CalPERS stressed that the decision was not based on “performance.”

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