Reuters – The U.S. Labor Department should provide pension plans with guidance on investing in hedge funds and private equity, a report issued by the Government Accountability Office (GAO) said on Wednesday.

The report found that pension plans are investing more and more in alternate investments like hedge funds, which are traditionally less transparent and riskier.

Available data of mid- to large-size plans show that between 21 and 27 percent invest in hedge funds and more than 40 percent invest in private equity, said the GAO, the investigative arm of Congress.

Because hedge funds and private equity investments are exempt from federal regulations that generally apply to other pension plan investments, the GAO recommended that the Secretary of Labor provide greater clarity on the differences between safe and unsafe investments.

The Labor Department said it would consider the feasibility of developing specific guidance. But said guidance may be difficult to develop given the lack of uniformity in describing hedge funds, private equity funds and their investments and operations.

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