First Hedge Funds Now Private Equity

New York ( – When the California Public Employees’ Retirement System (CalPERS) announced last fall that they were no longer going to be investing in hedge funds, the media had a field day. Despite the fact that CalPERS stated that the move wasn’t as a result of performance, the mainstream media seemed to try to paint it that way.

Let’s see if the same attention is paid to CalPERS latest move. According to reports from a number of sources, the fund will cut the number of managers it is invested with in half next Monday. While they aren’t lowering their allocation to private equity and real estate funds, they are cutting down the number of managers by eliminating the funds that have underperformed and then reallocating the money to the funds that outperformed.

Will the mainstream media try to spin this news the same way it tried to spin the hedge fund news? The strategy makes sense and it is what most people would do under the same circumstances, but that doesn’t mean there won’t be stories depicting the move as CalPERS moving out of private equity funds as well as real estate funds.

Despite the move by CalPERS, institutional investors as a whole have continued to grow their investments in hedge funds.

Rick Pendergraft
Research Analyst

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