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Average large US public pension allocates 7.4% to hedge funds

Monday, October 15, 2012
Opalesque Industry Update - In its just-released Special Research Report, Infovest21 examined the asset allocation of 26 large US public pension funds which allocate at least $1 billion to hedge funds. In this sample, the average large public pension fund allocates 7.4% to hedge funds/absolute returns funds in FY2012, an increase from 6.5% in FY2011.

FY

Equity

Fixed Income

Absolute Return/ Hedge Funds

Other
Alternative Investments/
Private Equity

Real Estate

Cash/ Short Term

2012

41.3

21.8

7.4

10.7

5.7

2.2

2011

43.8

22.6

6.5

9.7

7.0

1.8

2010

45.9

24.9

6.5

8.2

5.4

2.1

2009

46.9

25.9

6.5

8.5

5.4

2.5

The table above, which shows aggregated results for the past four fiscal years, highlights that the average allocation to equities decreased to 41.3% in FY2012 from 46.9% in 2009. The average allocation to fixed income declined from 25.9% in FY2009 to 21.8% in FY2012.

Other alternatives/private equity increased from 8.5% in FY2009 to 10.7% in FY2012. Real estate exposure fluctuated from 5.4% in FY2009 to 7.0% in 2011 and then dropped to 5.7% in FY2012.

Lois Peltz, president of Infovest21, said Infovest21 tracked the asset allocation trends for 26 large public pension funds as far back as annual results were provided. Of those, 24 were based in the US and two were based in Canada. The sampling included those pensions that allocated at least $1 billion in assets to hedge funds/funds of funds and publish their asset allocation on at least an annual basis.

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