WEST PALM BEACH, FL (HEDGECO.NET) – The California Public Employees Retirement System [CalPERS] may boost its hedge fund investments to as much as US $5.2 billion, according to published reports.Such an allocation when made, will make CalPERS the largest known single hedge fund investor. The pension fund manager initially appropriated US $1 billion to its hedge fund management portfolio inNovember 2000.
Since that investment, other pension funds have followed the CalPERS move and today hedge fund investment has become a part of an investment strategy for hedge funds, both in the United States and internationally. Traditionally pension funds have stayed away from such investments, in favor of more conservative and less risky investment instruments such as bonds.
CalPERS is still slow in allocating the already appropriated US $1 billion according to news reports, but CalPERS� authorities maintain that such investments require a �take it easy approach�. Mr. Mark Anson, the chief investment officer of CalPERS notes that, �Doing things right takes time. People associate hedge funds with risk, and we’ve deliberately set out to invest in a way in which there is actually less risk than in our traditional equity pool.�
CalPERS� hedge fund portfolio returned about 16.7% in 2003, and Anson explained that such returns were achieved while assuming limited risks. He said, �We trailed our benchmark last year because we took less risk — one fifth the risk of the market instead of [the planned] one half.� The CalPERS investment team took the time to educate themselves more about hedge funds, according to Mr. Anson.
Now, Mr. Anson has asked the CalPERS board to approve 3-5% of the total pension assets to be dedicated to hedge fund strategies. CalPERS has about US $105 billion in its pension fund assets. It is unclear when and if the board would grant such a request.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
Email: Editor@hedgeco.net
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