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Commonfund cools on hedge funds, eyes credit in 2019

Wednesday, January 30, 2019

Bailey McCann, Opalesque New York:

Commonfund, a $24.8 billion asset manager for endowments, foundations, and pensions, has cut back its allocations to hedge funds citing a desire to preserve liquidity as managers struggle to take advantage of market moves.

In its recent outlook letter, the asset manager said that it is less concerned about managing volatility and more concerned about maintaining the liquidity its clients need to cover yearly spending. As a result, Commonfund reduced its exposure to hedge funds and increased its allocations to core bonds.

Commonfund's hedge fund portfolio is constructed to minimize correlation to equity markets and credit - which are the primary risks that already reside in policy portfolios - with an eye toward capturing risk premia. Speaking to reporters today in New York, Deborah Spalding, Commonfund co-Deputy CIO said that they've opted to stay out of some primary strategies like equity long/short in order to maintain lower correlations to the market. Commonfund changed ts overweight equities position to neutral in the fourth quarter of last year.

"We do think its hard for our institutional clients to meet their spending needs without an allocation to private funds. That said, we are focused on finding strategies that have clear sources of uncorrelated return," Spalding said. "Notably, if you look ......................

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