WEST PALM BEACH, FL (www.hedgeco.net) – Pension Fund Trustees are reportedly uneasy about hedge funds, according to a new study just released. Many pension funds still need additional informationabout hedge funds. The new 88-page reports stated, �In our interviews with pension funds and their consultants, one message came through clearly: trustees need more education and information thanthey currently have.� The new report was compiled by KPMG asset Management in collaboration with another firm.
Such uneasiness was also applied to other liability driven investments and structured products. Some hedge fund practices such as leverage and opacity are part of the issues troubling pension fund trustees. Some trustees believe that hedge fund management vehicles are still too complex. The study predicts that the next wave of new money into hedge funds will come from pension funds that have so far adopted a wait and see attitude.
According to the report, North American pension schemes are more likely to invest more assets to hedge funds than European pension fund managers. It also noted that outside North America, pension funds� investment in hedge funds is less strategic and more opportunistic. The study also said, �That hedge funds carry huge reputation risk, and charge high fees with lower returns.�
The study found that the majority of the hedge fund managers believe the industry is facing overcapacity issues. One in three managers believe there is systemic risk arising from limited arbitrage opportunities in the markets. The study however concluded that more pension funds would increase their asset allocations to hedge funds when their comfort levels increase.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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