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U.S. Public Funds Split on Absolute Return Programs

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Once a coveted beat by financial journalists in the 2000s, hedge funds have taken a deep step back, as more U.S. pension funds begin to question the usefulness of hedge fund programs. Hedge funds are facing redemptions everywhere. For example, in 2016, hedge fund titan Richard Perry winded up his hedge fund, Perry Capital, after a 28-year run.

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Some major institutional investor giants such as the California Public Employees’ Retirement System (CalPERS) had decided to shutter hedge funds completely back in 2014. CalPERS was a pioneer in the hedge fund world, being one of the first major institutions to allocate to hedge funds in 2002. Post-2008, CalPERS became disenchanted with its hedge fund portfolio. CalPERS had US$ 4 billion in its Absolute Return Strategies (ARS) program in September 2014. On the other hand, some pension players are still searching for the next best hedge fund. The California State Teachers’ Retirement System (CalSTRS) opted to nix absolute returns, and migrate them toward risk-mitigation strategies (essentially not calling out hedge funds as an asset class, but purely as an investment strategy). CalSTRS has around a 9% allocation to risk mitigation strategies, seeking to hedge against volatile listed equities.

New Mexico State Investment Council Considers Dumping Absolute Return Portfolio

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SWFI First Read, January 16, 2018

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BP Plans to Take $1.7 Billion Charge to End Legal Claims on Deepwater Horizon

BP Plc is planning to take a US$ 1.7 billion charge to end legal claims regarding the disastrous 2010 Deepwater Horizon spill in the Gulf of Mexico.

Ethereum Co-Founder Leaves Fenbushi Capital

Vitalik Buterin, a co-founder of Ethereum, which is a cryptocurrency, exited China-based Fenbushi Capital. Fenbushi Capital was formed in 2015. Buterin is retaining his role as an advisor of Fenbushi Capital. Buterin dropped out of the University of Waterloo in 2014 when he got a Thiel Fellowship. This permitted him to work on Ethereum full time.

Kingdom Holding Sells Four Seasons Beirut Hotel Stake

Saudi Arabia’s Kingdom Holding sold its position in the Four Seasons Hotel in Beirut for roughly US$ 100 million. Blominvest, a unit of Blom Bank, advised on the transaction. The Four Seasons will continue to manage the property.

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Deutsche Bundesbank to Slowly Add Renminbi into Foreign Reserve Mix

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Deutsche Bundesbank’s executive board made a decision to invest in Chinese renminbi in the summer of 2017 as part of its foreign currency reserves. The German central bank on January 15, 2018, confirmed it will start investing in Chinese renminbi and also consider investing in additional foreign currencies. The move mimics the European Central Bank (ECB), which already considers the Chinese renminbi as a reserve currency. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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Bpifrance, CDB and Cathay Capital Launch Third Cross Border Fund

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Bpifrance, China Development Bank Capital Co., Ltd. (CDB Capital) and Cathay Capital agreed to launch Sino French Midcap Fund II. This is the second fund the group is launching after the €500 million Sino French Midcap Fund I from June 27, 2014. [ Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view content. ]

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