Wed, Oct 22, 2014
A A A
Welcome Guest
Free Trial RSS
Get FREE trial access to our award winning publications
Alternative Market Briefing

Other Voices: The changing role of hedge funds in pension plan portfolios

Thursday, May 02, 2013

amb
Shahid Ikram
This article was authored by Shahid Ikram, CIO at Aviva Investors, a global asset manager that is part of Aviva, one of the world’s largest insurance companies, and appeared first in Swiss daily newspaper Le Temps on Monday.

Mounting pension deficits present a dilemma for trustees. New cash from plan sponsors is in short supply and projected returns from mainstream assets are unlikely to close the funding gap. We believe the answer lies not in taking more risk, but in working smarter by applying hedge funds as part of a coherent risk-budgeting framework across the entire portfolio.

***

Mounting deficits are forcing pension plans to rethink their approaches to investment and portfolio construction. The root of the problem lies in schemes’ historic over-reliance on equities, which have produced disappointing returns. These, combined with falling bond yields and rising life expectancy have exacerbated the divergence between plans’ assets and liabilities. As a result, trustees often look to asset managers for solutions that will make pension assets "work harder", often by assuming higher levels of risk. However, a pension fund that is already in deficit is likely to have a tight risk budget and can ill-afford risking precious (and potentially irreplaceable capital) in higher-risk strategies. We believe that the answer to this dilemma lies in working smarter, not harder, by developing more intelligent......................

To view our full article Click here

Banner

Today's Exclusives Today's Other Voices More Exclusives
Previous Opalesque Exclusives                                  
More Other Voices
Previous Other Voices                                               
Access Alternative Market Briefing


  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. Commodities - Oil wreaking havoc on small-cap energy stocks sliding 36%[more]

    From Bloomberg.com: Owning almost anything in the U.S. stock market has been a losing proposition since September. Owning smaller energy companies has been a catastrophe. Hercules Offshore Inc. and Resolute Energy Corp. are among 19 oil-and-gas equities in the Russell 2000 Index that lost more than

  2. Investing - Hedge funds favor equity long/short, Strategic bond managers hedge against further high yield sell-off[more]

    Hedge funds favor equity long/short From Securitieslendingtimes.com: Equity long/short strategies will generate good returns for hedge funds in the future, according to a panel at this year’s Risk Management Association Conference on Securities Lending in Naples, Florida. Panellists Sand

  3. Legal - Ex-hedge fund analyst weeps as judge hands down 5 year sentence, Former Columbus investment manager Steven P. Moore indicted on theft charges, SEBI confirms ban for Hong Kong hedge fund, SEC announces enforcement action against compliance officer[more]

    Ex-hedge fund analyst weeps as judge hands down 5 year sentence From Hereisthecity.com: An ex-hedge fund analyst was sentenced to 5 years in prison for his role in insider-trading scheme. The New York Post reports that former hedge fund analyst Matthew Teeple was sentenced Thursday to fiv

  4. Goldman in talks to acquire IndexIQ[more]

    From Bloomberg.com: Can Goldman Sachs put ETF investors on a liquid diet? Goldman is in talks to acquire IndexIQ, Reuters has reported. Index IQ is a small exchange-traded-fund firm known mostly for products that replicate hedge fund strategies, called "liquid alternative" ETFs. While IndexIQ has 11

  5. Other Voices: CALPERS dilemma should be a warning to hedge funds wanting institutional investors[more]

    From Ian Hamilton, founder of IDS Group. A quick comment on the CALPERS’ disinvestment from the hedge fund market and the jitters it is causing. Pension Funds should not be sheep and follow CALPERS’ decision as the issues that CALPERS has with hedge fund investments are in many ways unique t