Shell Fund to Expand Alternative Investments

Wall Street Journal – One of the U.K.’s biggest pension plans is moving forward with a strategy to invest hundreds of millions of pounds in alternative assets, potentially including hedge funds for the first time.

The £10.6 billion ($16.8 billion) U.K. pension fund for oil company Royal Dutch Shell Group PLC agreed to a new strategic investment plan over the summer, according to a recent report to members of the pension plan. This includes a 5% allocation to alternative assets — a category that includes hedge funds, infrastructure, and commodity funds. The allocation will come on top of the 5% it already has invested in private equity.

The Shell fund is the latest big investor to give a vote of confidence to the hedge-fund industry, which went through the worst period in its history during the financial crisis last year. Last week, alternative-assets consultancy Preqin published a survey of 50 pension funds, insurers, family offices and other investors, and found that 73% of them said their hedge-fund portfolios had either met or exceeded return expectations, up from 62% that said so last year.

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