Local authority pension schemes cut investments in hedge funds
BRITAIN’S TOP local authority pension plans have cut investments in hedge funds in favour of better-performing alternatives, a review of annual reports shows, adding pressure to an industry beset by weak performance, outflows and fund closures.
A Reuters analysis found the value of hedge fund investments at the biggest 10 local authority pension schemes in England and Wales, including West Yorkshire Pension Fund, fell by nine per cent to £1.5bn in the 12 months to the end of March.
The schemes collectively manage £102.7bn and provide the best window on the thoughts of the UK pensions industry as most other public and corporate pension
schemes share little information.
Pension funds are key investors, as they tend to park their money for the long term, and public pension funds account for about a fifth of hedge fund assets globally.
One of the biggest reductions came from the West Yorkshire Pension Fund (WYPF), which cut its investment by half to £127.6m, from £254.3m, redeeming cash from hedge fund investing strategies run by Aurum and BlackRock.
“Hedge funds were reduced in favour of better, more consistent returns from other alternative asset classes, which have been increased in the year,” a scheme spokesman said, without giving details.
Other alternative asset classes are likely to include areas such as private equity, infrastructure and property funds.