Mon, Jan 26, 2015
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

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 - Druckenmiller alums at PointState make $1 billion on oil, Andurand Capital sees oil sliding to $40[more]

    Druckenmiller alums at PointState make $1 billion on oil From Bloomberg.com: Hedge fund manager Zach Schreiber stood on stage at Avery Fisher Hall in New York eight months ago and made a bold prediction. “We believe crude oil is going lower -- much lower,” Schreiber, 42, told the audienc

  2. Investing - David Einhorn discloses a new position in Time Warner, Canyon trimming bets on mortgage bonds after making $7bn[more]

    David Einhorn discloses a new position in Time Warner From FTLeavenworthlamp.com: …Einhorn also disclosed a new position in Time Warner. "Since 2009, TWX has refocused its business into a collection of high quality assets including basic cable networks (Turner and CNN), a movie studio (

  3. Top performing private equity firms you should invest in[more]

    Komfie Manalo, Opalesque Asia: Professor Oliver Gottschalg of Paris-based HEC Business School, also known as Ecole des Hautes Etudes Commerciales de Paris has released his annual ranking of the top performing private equity firms. The 2014 HEC-DowJones Private Equity Performance Ranking

  4. Comment - Why invest in hedge funds if they don't outperform the market?[more]

    From Forbes.com: Hedge funds have always been a bit exotic and an enigma to some, but bottom line they are supposed to produce good returns using a range of strategies including global macro, event driven and relative value (arbitrage). And, sophisticated or high-net-worth individuals (HNWIs) could

  5. Owen Li 'truly sorry' for blowing up $100m of hedge fund’s assets[more]

    From CNBC.com: A hedge fund manager told clients he is "truly sorry" for losing virtually all their money. Owen Li, the founder of Canarsie Capital in New York, said Tuesday he had lost all but $200,000 of the firm's capital—down from the roughly $100 million it ran as of late March. "I take r