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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 to CALPERS.
The issue is the size of CALPERS and the 4% they have allocated.
They are correct in that the impact on the performance of the fund versus the amount of work they have to do in monitoring the funds is disproportionate.
4 % is not going to have any significant impact upon CALPERS performance. It needs to be about 20% and if it was then the fund would swamp the market.
Then there is the issue of monitoring hedge funds.
Given the lack of proper regulation of hedge funds in the US and standardization it really means that the investor has to do considerably more work. I have found that internationally many hedge funds do not have good corporate governance and disclosure. This is often disclosed to me when I am interviewed by institutional investors who want to invest in funds where I am a director (the Scotstone Funds) or administered by IDS.
These institutions are very impressed at the state of corporate governance (board meetings, records etc.) and the willingness of the funds to have excellent disclosure. After all, as I wrote in one of my columns, ...................... To view our full article Click here
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