When it comes to pension plans and hedge funds, size matters. That message came across loud and clear last fall when the US$298-billion California Public Employees’ Retirement System (CalPERS) eliminated its $4-billion hedge fund program.
The hedge fund industry has made a great deal of progress over the past 20 or so years, says Chris Addy, president and CEO of Castle Hall Alternatives. He made the remarks at an AIMA Canada event in Toronto on Tuesday.
Franklin Templeton Investments has introduced its first multi-manager, liquid alternative strategy in Canada.
Understanding the three main types of hedge funds and where pension funds should invest
There was significant growth in assets held by private equity, hedge fund, private debt, real estate and infrastructure fund managers in 2014.
Hedge funds closed the final month of the year in positive territory. The Eurekahedge Hedge Fund Index was up 0.25% in December, while the MSCI World Index finished the month down 0.8%.
As institutions invest less in traditional hedge funds, managers are considering new products to attract investors, says EY’s 2014 global hedge fund and investor survey.
Hedge funds are up 3.45% year-to-date, with roughly 18% of funds boasting double-digit returns for the year, half the number for the same period last year, finds the latest Eurekahedge Report.
Recent decisions by two large U.S. public pension plans to pull back from hedge fund investments, and the likelihood of a sixth consecutive calendar year of return averages underperforming broad equity market returns, are not expected to curb investors' overall allocations to hedge funds, says Fitch Ratings.
As asset growth in traditional hedge funds from institutional investors continues to slow, hedge fund managers are pinning their hopes on the power of new products to attract investor assets and drive growth.