WEST PALM BEACH, FL (HEDGECO.NET) – The second largest pension plan in Canada, the Ontario Teachers Pension Plan, has announced intentions to increase its hedge fund allocations with an additional US$300 million. The new money will be allocated this year according to the report. The Ontario Teachers Pension Plan is among the early pension plans to invest with hedge fund managers in NorthAmerica.
The California Public Employees Retirement System [CalPERS] led other pension plans in pursuing hedge fund investment strategies. CalPERS has also boosted its hedge fund investments to as much as US $5.2 billion according to published reports. This allocation when completed will make CalPERS the largest known single hedge fund investor. Initially, CalPERS appropriated US $1 billion to its hedge fund management portfolio.
Since that investment, other pension funds have followed the CalPERS move, and today hedge fund investments have become a part of an investment strategy for pension 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.
The Ontario Teachers Pension Plan began investing in hedge fund managers in 1996. In a statement attributed to Ron Mock, the vice president of alternative investments at Ontario Teachers, Mock said, �With institutions pouring money into hedge funds, managers may find fewer market anomalies to exploit, leading to the possibility of lower future returns, the Ontario plan is seeking more �unique� investment alternatives�, he said.
Since 1996, Ontario Teachers Pension Plan has appropriated about US $3.5 billion of its management assets. Last year according to published reports, the pension plan had a significant gain of 18%, and since 1996, its hedge fund portfolio has gained in all the years with the exception of 1998; the year of the collapse of Long Term Capital Management, when it lost 0.4%. This year so far, the plan has gained about 3.0 % according to Mock.
Ontario Pension Plan manages total investment assets of US $58 billion for about 300,000 teachers who belong to the plan.
Paul Oranika
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HedgeCo.Net
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