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Public Investors Challenge Hedge Funds to Lower Fees

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smallmoveA number of public investor chief investment officers (CIO) are subscribing to the belief of having fewer hedge fund managers, but allocating more money to each relationship. CIOs understand that having too many hedge fund managers in a portfolio can dilute investment performance. Diversification in terms of hedge fund managers may not be the answer in an absolute return portfolio. CIOs instead are putting money towards managers where they believe skill is high.

It is paramount to keep in mind that hedge fund returns were excellent or decent when the industry was small. The hedge fund industry had a major setback in 2008. The majority of hedge funds have a life cycle; very few hedge funds can post major returns year after year, especially as their assets under management swell. Sovereign wealth funds and public pensions are lured to the bigger hedge funds. Large hedge funds usually maintain a robust infrastructure. Smaller hedge funds tend to outperform the bigger hedge funds due to many factors such as investment universe opportunities.[ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

Andrew Claerhout Leaves OTPP

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Andrew J. Claerhout exited the Ontario Teachers’ Pension Plan (OTPP). He was Senior Managing Director of Infrastructure and Natural Resources. His responsibilities included overseeing a swath of infrastructure acquisitions and asset management globally, along with investments in oil and gas, agriculture (avocados for example), timberlands and other resource sectors. Clearehout joined OTPP back in 2005.

Taking his spot in the interim is Dale Burgess, Managing Director, Latin America, at OTPP.

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PwC Sells US Public Sector Practice to Veritas Capital

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PricewaterhouseCoopers (PwC) inked a deal to sell its U.S. public sector business unit to Veritas Capital Fund Management, L.L.C., a private equity firm. Post-deal, the business unit will be renamed and run as a separate company. PwC’s public sector business services U.S. federal government clients such as the Department of Defense, Homeland Security, Veterans Affairs, Health and Human Services and the State Department. The business unit also services local and state U.S. governments.

For the moment, Veritas Capital seeks to keep the current management in place.

Advisors

PwC was advised by Morgan Stanley. Davis Polk & Wardwell advised PwC. Veritas Capital was advised by law firm Schulte Roth & Zabel LLP.

Veritas Capital’s Activities

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HNA Sells 1.2% Stake in Hedged Investment in Deutsche Bank

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Chinese conglomerate HNA Group Co. sold off roughly a 1.2% stake in Deutsche Bank AG for around €300 million (US$ 374 million), reducing ownership down to 8.8%. HNA Group held the bank shareholding through Vienna-based asset manager C-Quadrat Investments AG, in which, HNA is a majority owner in. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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