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Alternative Market Briefing

Hedge funds must use stable and validated technologies to continue attracting institutional investors

Thursday, January 08, 2015

Komfie Manalo, Opalesque Asia:

Hedge funds must use stable and validated technologies to continue attracting institutional investors in the light of the decision by the influential California Public Employees’ Retirement System of Calpers to pull out its entire $4bn hedge fund portfolio in September.

Paul Bebber, regional sales manager at Advent Software said that Calpers’ decision has a "profound significant" effect on the industry across the globe as a string of public pension funds are now reportedly re-examining their existing or planned hedge fund investments.

"We’re seeing similar issues in Europe," he said and added, "In September it emerged that Dutch pension fund PMT would close its €1bn hedge fund portfolio, blaming high investment fees. In the UK, the Railways Pension Scheme and BT Pension Scheme are said to be reassessing their hedge fund investments, while the chairman of the London Pension Fund Authority said hedge funds’ high fees are no longer justifiable."

Bebber said he was not surprised by the backlash. Investors have been grumbling about hedge funds’ traditional "2 and 20" fee model for years. Recent performance – returns of 3.47% through October, compared to 5.18% for the MSCI World Index, according to Eurekahedge – has added to the pressure, he said. For 2014, the Eurekahedge Hedge Fund Index was up 4.34% while the MSCI World closed the year up 5.50%.

Many institutional investors stil......................

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