Monday, November 10, 2014

Risky Business

The University of California has increased its hedge-fund holdings by a factor of 10 since 2004, even as the California Public Employees’ Retirement System, the largest U.S. pension, said it’s pulling all $4 billion it had in such investments because they’re too complex and too expensive.
Hedge funds account for $5.6 billion of the university’s $90.7 billion portfolio, which consists mostly of a pension fund and endowments, according to university records. UC had less than $500 million in hedge-fund holdings a decade ago, the records show...

Ted Eliopoulos, chief investment officer of $298 billion Calpers, said in September that the pension would eliminate its hedge-fund holdings and put the $4 billion into other investments. The Oakland-based university system doesn’t plan to follow Calpers’s lead, spokeswoman Dianne Klein said. “The performance of UC’s absolute return program has met our objectives,” Dan Scannell, a university public-records coordinator, said in a statement. “The role of the absolute return strategy is to add diversification while lowering overall volatility to the entity returns.”...  The UC records don’t show the specific hedge funds in which the university has holdings, nor do they show the cost of administering the program. Klein said that information wasn’t available...

Full story at

Well, the race for returns is bound to have some risks, right?

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