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How Hedge Funds Can Access Sovereign Wealth Funds

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hedge funds

As U.S. pensions such as California Public Employees’ Retirement System (CalPERS) – which pulled out of hedge funds in 2014, and New Mexico Public Employees’ Retirement Association which lowered its hedge fund allocation from 7% to 4%, sovereign wealth funds are becoming a larger target market for hedge funds. There is a segment of sovereign wealth funds that allocate to hedge funds to achieve specific investment goals. For example, the Korea Investment Corporation (KIC) is a sovereign wealth fund that invests in hedge funds. One of KIC’s former chief investment officers Scott Kalb possessed a strong hedge fund background. Some other sovereign funds that commit capital to hedge funds include, but not limited: Abu Dhabi Investment Authority (ADIA), Australia’s Future Fund, Alaska Permanent Fund and Temasek Holdings. Aggressively, hundreds of hedge funds annually try to break into the world of sovereign wealth funds; however, many fall short for a variety of reasons such as sending unsolicited emails of investment performance. This leads to many hedge fund marketers giving up on the perceived Herculean effort of raising capital from giants, relying solely on family office money, wealthy foundations, fund-of-funds and consultants.

Though many hedge funds have fallen short in generating alpha in 2014, some managers scored stellar returns.

Performance and Repeatable Investment Strategies

Relatively speaking, hedge funds are an expensive asset class to invest into when compared to traditional active equity managers. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

US Becomes the Largest Crude Oil Producer in the World

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With the onset of fracking technology and a flood of capital entering the Texas energy market over the past decade, the United States is now the largest producer of crude oil. According to the U.S. Energy Information Administration, on September 12th, they revealed, “The United States likely surpassed Russia and Saudi Arabia to become the world’s largest crude oil producer earlier this year, based on preliminary estimates in EIA’s Short-Term Energy Outlook (STEO). In February, U.S. crude oil production exceeded that of Saudi Arabia for the first time in more than two decades. In June and August, the United States surpassed Russia in crude oil production for the first time since February 1999.”

Light sweet crude oil grades have rapidly expanded since 2011.

With two months remaining before U.S. sanctions go into effect against Iran, Iran’s crude exports are falling fast. European oil companies are exiting Tehran fearful of the repercussions of sanction violations, coupled with the country’s currency crisis. Iran’s influence over global oil prices have dwindled.

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Trump Goes Across the Political Aisle to Nominate Nellie Liang to Federal Reserve Board

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U.S. President Trump nominated Nellie Liang to the Federal Reserve Board of Governors. She is a long-time staff member of the Federal Reserve, joining in 1986 as a research economist. Liang must still be confirmed by the U.S. Senate pending the job post. She is a graduate of University of Notre Dame in 1979 and received her doctorate from the University of Maryland in 1986.

Ms. Liang is a registered Democrat.

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Ivanhoé Cambridge to Acquire Callahan Capital Properties

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Ivanhoé Cambridge, a unit of Caisse de dépôt et placement du Québec (CDPQ), signed a deal to acquire Callahan Capital Properties (CCP). Eastdil Secured advised on the transaction. CCP is Ivanhoé Cambridge’s investment partner of six years.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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