Reuters – Low expected returns from stocks and bonds has persuaded some of the worlds biggest pension funds to look at hedge funds as a way of boosting their portfolios, panellists at a hedge fundconference said on Tuesday.
Poor average returns from the industry over the last couple of years — around 7.5 percent last year and less than 10 percent in 2004 — have not put them off and neither have losses of around 2 percent in May and June.
CalPERS, the largest pension plan in the United States, which has 83 percent of its assets in stocks and bonds is looking to invest $4 billion dollars (2.17 billion pounds) — out of a total around $210 billion — in hedge funds by the end of this year.
“We have relatively low return expectations from (stocks and bonds),” said Eric Baggesen, a senior portfolio manager at CalPERS at the conference organised by ICBI. “The problem we have is deploying capital in that (hedge fund) space.”
