Pension Fund Allocations Rising
February 26th, 2010
Pension Fund Allocations Rising
Pension Funds Look to Narrow Gap Using Hedge Funds
Hedge funds are attracting more institutional investors as pension funds try to narrow the gap between benefits and payments. Many pension funds lost money during the financial crisis through traditional and alternative investments and some pension fund managers are hoping that hedge funds will continue the great performance of 2009 and make up some of that capital.
Florida’s pension system, the fourth-largest state retirement plan, will decide next week how big to make its first hedge-fund investments as it tries to close a 7 percent benefit-payments deficit.
Executives of the Florida Retirement System, which oversees $112 billion for a million firefighters, teachers and garbage collectors, had been considering the move into the loosely regulated private partnerships since 2007. Wisconsin’s pension also plans its initial allocation this year, while Boeing Co.’s probably will raise its holdings, as retirement funds seek to recoup losses from the financial crisis.
The largest public and private pensions, underfunded by more than $1 trillion, are increasing their hedge-fund bets after a lull at the end of 2008. About 15 percent of U.S. institutions plan to boost their allocations, and 80 percent will keep them steady, according to a survey by SEI Investments Co.
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