WEST PALM BEACH, FL (HEDGECO.NET) – A new released study states about 7% of UK�s pension plans have invested with hedge fund managers. A few years back, UK�s pension plans have little or no hedgefund portfolios. However, now that has changed, as hedge funds have become appealing to institutional investors as well as private wealthy individuals. According to the new survey conducted by theUK�s Department of Work and Pensions, a total of 699 pension plans were polled; 7% of the respondents have invested with hedge fund managers. Many pension plans suffered significantly as a result ofproblems in the global equity markets from the year 2000-2003.
There has been a growing gap between pension assets and expected liabilities; this problem has led to a near crisis stage for UK�s pension establishments. Some pension and investment consultants have advised pension plans to look at hedge funds as a suitable investment option. These instruments may help retirement plans to close the widening gap between assets and liabilities.
The new study said, “The findings show that it is still only a minority that have reviewed the higher-risk options such as hedge funds…. where changes had occurred they were generally in the direction of categories with less rather than more risk.�
While that number is still small it is nonetheless significant, considering that traditionally pension plans in the UK have always had a conservative investment philosophy. The study also showed that 28% of the respondents said they have considered alternative investments such as hedge funds. About 69% of the surveyed, said they have considered other investment asset classes such as government bonds, domestic stocks, foreign stocks, cash. However, the study showed that of that number, 62% actually hold such assets in their investment portfolios.
Earlier in the year, data by Russell Mellon/CAPS, a pension fund-tracking firm showed that less than two percent of UK pension fund assets were devoted to hedge funds vehicles. Authorities in both the UK and the United States for possible regulatory oversight are currently examining hedge funds.
Paul Oranika
Editor-in-Chief
HedgeCo.Net
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