Some good, if not surprising, news from Pension Funds.
Picked up this green shoot from Hedgeworld yesterday.
Asset/Liabilities are all out of whack …disturbingly so, in fact…plans have to generate returns.
What this article doesn’t state is that the large institutional investors will likely continue to invest through fund of funds or the largest HFs.
BEVERLY HILLS, Calif. (Reuters)—Institutional investors like pension funds will put fresh money into hedge funds this year but they will bargain for more concessions on fees and transparency, industry experts said on Tuesday [April 28].
“There will be significant growth in hedge funds and the public pension funds will be leading the charge,” Stephen Nesbitt, chief executive officer of Cliffwater LLC, a consulting firm that advises pension funds on hedge fund investments, said at the 2009 Milken Institute Global Conference….
…Looking ahead, experts forecast that pension funds in particular will make fresh commitments in the fourth quarter of 2009. Roughly 40% of all public pension funds invested with hedge funds last year, having committed about $78 billion, industry data show.
One reason that pension funds will return to hedge funds is that they are forced to earn returns of roughly 8% a year to make retirement payments to teachers, police officers and other state workers.
“Large pension funds need to take risk,” Mr. Nesbitt said. “They cannot wait this [downturn] out in Treasuries.”
Hedge funds have long promised outsized returns by relying on trading techniques like selling stocks short that are off limits at most mutual funds.
At individual hedge fund firms, managers are reporting the signs of new interest even though potential clients are still shell-shocked by last year’s industry meltdown.
“We are seeing a lot of interest from new investors and from folks who hadn’t been previously been interested in [the global macro investment style],” said Jason Cummins, head of economic research at hedge fund powerhouse Brevan Howard Asset Management.