Tue, Mar 19, 2024
A A A
Welcome Guest
Free Trial RSS pod
Get FREE trial access to our award winning publications
Alternative Market Briefing

Other Voices: NYCERS should reconsider exiting all hedge funds

Tuesday, April 19, 2016

From Donald A. Steinbrugge, CFA – Managing Partner, Agecroft Partners: I would like to share some thoughts regarding New York City Employees Retirement System (NYCERS) voting to exit all hedge funds. Pension funds should always be managed in the best interest of the plan’s beneficiaries. I believe this blanket decision to eliminate a full set of investment opportunities may result in doing the exact opposite. In addition, some of the comments by people associated with the pension fund raise concerns.

The first of these is the pension fund’s consultant stating they can reach their targeted investment returns with less risky funds. One of the main benefits hedge funds provide to institutional investors is to reduce the risk in their portfolios. Hedge fund indices historically have had significantly less volatility than the equity markets. In addition, many hedge fund strategies have very low correlation to long only benchmarks which helps reduce the overall volatility of a portfolio through diversification.

Most pension funds have an actuarial rate of return assumption of 7% to 8%. This is a very difficult return target to achieve using only traditional fixed income and equity investments. On the fixed income side, the US 10-year treasury is yielding less than 2% and fixed income securities will lose value if interest rates rise. On the equity side, stock valuations are above their historical averages with a back drop of tepid global economic growth, and little dr......................

To view our full article Click here

Previous Opalesque Exclusives                                  
Previous Other Voices                                               
Access Alternative Market Briefing

 



  • Top Forwarded
  • Top Tracked
  • Top Searched
  1. KKR raises $6.4bn for the largest pan-Asia infrastructure fund[more]

    Laxman Pai, Opalesque Asia: The New York-based global investment firm KKR has raised a record $6.4bn for its second Asia-focused infrastructure fund, underlining investors' continued appetite for private markets. According to a media release from the alternative assets manager, the figure top

  2. Bucking the trend, top hedge fund makes plans for a second SPAC[more]

    From Institutional Investor: SPACs aren't dead. At least not to the folks at Cormorant Asset Management. The life sciences firm, whose hedge fund topped its peers in 2023, is confident it will match the success of its first blank-check company. Last week, the life sciences and biopharma speciali

  3. Benefit Street Partners closes fifth fund on $4.7 billion[more]

    Bailey McCann, Opalesque New York: Benefit Street Partners has closed its fifth flagship direct lending vehicle, BSP Debt Fund V, with $4.7 billion of investable capital across the strategy. Benefit Street invests primarily in privately originated, floating rate, senior secured loans. The fun

  4. 4 hedge fund themes that are working in 2024[more]

    From The Street: A poor earnings report from Tesla (TSLA) has not hurt the indexes on Thursday. The decline in Tesla stock, which is losing its position in the Magnificent Seven pantheon, is more than offset by strong earnings from IBM (IBM) and ServiceNow (NOW) . In addition, the much higher-t

  5. Opalesque Exclusive: A global macro fund eyes opportunities in bonds[more]

    Bailey McCann, Opalesque New York for New Managers: Munich-based ThirdYear Capital rebounded in 2023, following a tough year for global macro. The firm's flagship ART Global Macro strategy finished the year up 1