WEST PALM BEACH, FL (HEDGECO.NET) – The California Public Employees’ Retirement System, {CalPers} may double its hedge fund management portfolio in light of the stagnating stock markets. According tothe report Mark Anson, the Chief Investment Officer for the largest U.S. pension fund, has suggested to the investment committee of the pension fund manager to boost the total assets dedicated tohedge funds.
CalPers was among the first US pension funds to begin investing with hedge fund managers. Traditionally, pension funds have stayed away from such risky investments in favor of more conservative and less risky investment instruments such as bonds. Since CalPers made its initial hedge fund investment, other pension funds have followed the move and today hedge funds have become part of an investment strategy for pension funds, both in the United States and internationally.
Currently CalPers has about $1 billion in its hedge fund management portfolios. However a consultant to CalPers, Wilshire Associates Inc., has urged caution with their approach. Michael Schlachter, managing director, of the Consulting group said in a letter to Mark Anson �We would urge the staff to invest any additional money slowly and selectively.� Schlachter added, �While $1 billion is merely 0.6 percent of the total Calpers portfolio, it is a significant sum to put to work in the hedge fund industry.�
Schlachter thinks a bubble scenario may be possible in the hedge fund industry in light of the exponential growth which hedge funds have enjoyed in the past five years. Hedge funds manage over $1 trillion in global investor assets. CalPers� hedge fund portfolio returned about 16.7% in 2003. Anson once explained that such returns were achieved while assuming limited risks.
CalPers provides retirement and health benefit services to more than 1.2 million members and more than 2400 employers. According to company data, its membership includes inactive and retired members from the State, School districts, and local public agencies.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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