Bloomberg – U.S. hedge-fund investors are paring the roughly $80 billion they pay in annual fees by cutting out the middlemen.
New York State’s $155 billion retirement system has shifted a portion of its $5.3 billion in hedge-fund assets away from the intermediaries, known as funds of funds. ITT Corp.’s pension fund and Baylor University’s endowment have already made the move.
“We didn’t want to pay the extra layer of fees,” said Scott Pittman, investments director for the $1.1 billion Baylor fund in Waco, Texas. The university, which began using funds of funds five years ago, now has direct investments with 15 managers.
For the first time, more than half of the hedge-fund assets of the 200 largest U.S. pension plans were invested with individual managers last year, data compiled by Pensions and Investments show. The proportion of pension assets overseen by funds of funds fell to 49 percent on Sept. 30 from 57 percent in 2002, when the magazine started collecting the information.
