Here’s Why CalPERS Dropped Hedge Funds

hedge funds

Are hedge funds losing significance with major institutional investors? The California Public Employees’ Retirement System (CalPERS), the largest U.S. pension fund, expelled hedge funds from its portfolio – sending a shock to the estimated US$ 3 trillion hedge fund industry. Some hedge funds are known for leveraged bets on market beta. CalPERS interim Chief Investment Officer Theodore Eliopoulos won the support of trustees to wind down the pension’s US$ 4 billion hedge fund portfolio within 1 year. Eliopoulos emphasized that CalPERS dumped hedge funds because of their complexity, cost and ability to scale – not investment performance. This battle is being fought in San Francisco, as the San Francisco City & County Employees’ Retirement System is debating on whether to move forward with a US$ 3 billion hedge fund allocation. SF pension board member Herb Meiberger is vocally against the allocation. The plan’s Chief Investment Officer William Coaker and other board members are backing the plan.

Ishii wanted to move US$ 2.5 billion from hedge funds into fixed income.

Hedge Fund Program Size

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