New York (HedgeCo.Net) – The California Pension Fund (Calpers) has announced that it is cutting back on its investments into the hedge fund arena by 40%, the WSJ reports.
A Calpers spokesman told the paper that the investment staff will make a formal recommendation to the board in the fall.
Calpers reported a preliminary 18.4 percent return on investments for the 12 months that ended June 30, 2014. CalPERS assets at the end of the fiscal year stood at more than $300 billion.
“The retreat comes after many pension funds poured money into hedge funds in recent years in hopes of making up huge shortfalls.” The Wall Street Journal reports. “The officials overseeing pensions for Los Angeles’s fire and police employees decided last year to get out of hedge funds altogether after an investment of $500 million produced a return of less than 2% over seven years, according to Los Angeles Fire and Police Pensions General Manager Ray Ciranna. The hedge-fund investment was just 4% of the pension’s total portfolio and yet $15 million a year in fees went to hedge-fund managers, 17% of all fees paid by the fund.”
CalPERS 20-year investment return is 8.5 percent, while its return since 1988 is 8.9 percent.
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