Reuters – Low expected returns from stocks and bonds have persuaded some of the worlds top pension funds to look at hedge funds as a way of boosting their portfolios, panellists at a hedge fundconference said on Tuesday.<\/p>\n
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.<\/p>\n
CalPERS [CALP.UL], 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 of a total around $210 billion in hedge funds by the end of this year.<\/p>\n
“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.”<\/p>\n
That is partly because large flows of money into the $1.5 trillion hedge fund industry in recent years have limited profit opportunities for many of the investment strategies they use.<\/p>\n
The World Bank Pension Fund has 12 percent of its $14 billion under management allocated to around 40 hedge funds.<\/p>\n