WEST PALM BEACH, FL (www.hedgeco.net) – More European Pension Fund managers are switching to hedge funds. The Pension fund managers of Nestl�s, Jean Pierre Steiner said such strategy is a good onebecause according to him, equity markets have not kept up with hedge funds. Since equity markets reached their peak in 2000, hedge funds have continued to deliver absolute returns to their investors.
Nestl�s has been investing in hedge funds since 2000, and since that time Mr. Steiner says his fund has upped its hedge fund portfolio to about 18 percent. In 1997 Nestles hedge fund portfolio stood at about 3 percent. While many European pension funds are continuing to discover hedge funds, Nestl�s was among the few pension fund managers in Europe to begin investing with hedge funds back in 1990�s, and Steiner said such strategy has paid off.
Steiner explained that his firm has increased its hedge fund investments in its US pension plans from 5 percent to about 15 percent. Annual hedge fund returns for Nestl�s have averaged about 10 percent in the past eight years according to him. Today many European pension fund managers are joining the Nestl�s move. Hedge funds have been viewed in Europe historically as a highly risky asset class. European pension fund managers are traditionally more conservative than their North American counterparts.
According to a report compiled by Greenwich Associates, in 2004, about 32 percent of European pension fund managers invested money in hedge funds. Many European pension fund managers see opportunities in hedge funds, particularly in an era marked by lackluster equity returns. There is also the looming financial crisis in many European pension funds arising from the number of retirees set to go into retirement. Peter Ball, head of British institutional business at J.P. Morgan Fleming Asset Management in London, said many European institutional managers like the multi-strategy hedge funds because they are perceived to be less risky than other hedge funds.
More European institutional managers are set to invest more of their portfolio assets in hedge funds over the coming months and years.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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