WEST PALM BEACH, FL (www.hedgeco.net) – The level of investments in hedge funds by US based pension fund managers is gathering more momentum according newly released reports. Following the technologymarket crash of the late 1990�s and early 2000�s, pension fund mangers suffered significant losses from their traditional long only portfolios. But new reports show that US pension fund managers haveturned to hedge funds in large numbers, seeking alternative returns for their growing number of retirees.
The new report shows that US based pension fund managers now have an average of 3.0 percent of their assets invested with hedge fund managers in 2005. According to Hennessee Group in 2001, pension fund in US only had an average of about 1 percent invested with hedge funds.
But with rising level of pension fund investments in Hedge Funds also comes other requirements, now pension fund managers have to play by the rules of hedge fund managers, and must pay both management and performance fees to hedge fund managers. Such was not the case when pension funds invested largely on mutual funds and other long only vehicles. By then pension fund managers were highly coveted, and they often call all the shots.
Robert Schulman, chairman of Tremont Capital Advisors, said “Institutional investors are facing a new set of circumstances when they put money with hedge funds and the (hedge fund) industry is forcing a lot of changes.� In 2004 former Goldman Sachs partner Eric Mindich was able to raise over $3 billion for his hedge fund, largely through institutional investments. The search for returns by institutional investors has helped experienced money managers to raise large trading capital often relying on their previous track record.
Other hedge funds attracting significant pension fund attraction includes those of mangers such as Jack Meyer, James Simons and others. This year the average hedge fund has gained about 3.5 percent due to difficult markets during the first half of the year. Experts however believe that the second half of 2005 will be better than the first half, and the average hedge fund return could rise to near 8 percent for the year.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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