WEST PALM BEACH, FL (www.hedgeco.net) – New released report says U.S pension funds, endowments and foundations are planning to devote more assets to hedge fund management vehicles, internationalstocks and high-yield bond. Such strategy was devised as a way of meeting their obligations according to the report. Advances in medical science and technology have enabled people to live longerlives, and will obviously increase obligations of pension funds and the like. Research firm, Greenwich Associates, surveyed about 1,000 pension funds endowments and foundations. The report also notedthat, “Pension plan sponsors in the United States are confronted with a serious challenge in funding and solvency ratios that remain persistently low despite two years of relatively strong marketperformance.�

The firm discovered that investments of the group in domestic instruments, such as stocks and fixed-income securities are falling. On the other hand the research shows that their investments in hedge funds, international stocks and other alternative investment portfolios are on the rise. The report noted, “Funds are attempting to bridge the gap by shifting funds out of asset classes with relatively low expected rates of return — and into investments with more robust potential, such as international equities and alternative assets.�

Details of the new survey show that Pension funds, foundations and endowments managers are prepared to increase their risks by making investments in alternative investment instruments, as a way to address their increasing obligations. The exposure of such group to hedge fund management instruments increased from 1.3 percent in 2003 to 1.6 percent, representing an increase of about $20 billion during 2004. It was also reported that the groups� exposure to international stocks increased from 11.1 percent in 2003, to 13.3 percent in 2004.

Endowments and Foundations have been more aggressive with their hedge fund investments according to the report. The group�s hedge fund investments have grown to about 10 percent of the total of their assets, about one-third of such group is investing with hedge fund managers the report noted. The study also said the total number of US Institutional investors investing with hedge fund managers had grown from 15 percent in 2001 to about 28 percent in 2004.

Paul Oranika
Editor-in-Chief
HedgeCo.Net
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