CalPERS Shifts Hedge Fund Strategy

American public pension funds are increasing allocation to hedge funds. Pension funds desire improved returns as pension costs for public employees continue to put pressure local government finances.

The California Public Employees’ Retirement System (CalPERS) with US$ 254.5 billion in assets is juicing its augmentation to event-driven and global macro hedge funds. 5% of their hedge fund portfolio will be allocated to event-driven strategies. Global macro strategies will grow to 10% of the hedge fund portfolio, up from 2%. The big news is that CalPERS plans to decrease fund-of-fund investments, excluding those investing in small hedge funds, in this area from 14% to 5%. About US$ 5 billion in assets is allocated to hedge funds. The pension fund’s Absolute Return Strategies Program returned 4.2% in 2012 which was below the 5.2% benchmark.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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