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Bailey McCann, Opalesque New York:
Several fraudulent incidents and the new EU AIFM Directive have created a poor environment for Dutch pension funds to invest in hedge funds according to several investors at the most recent Opalesque Netherlands Roundtable. Pension fund boards are responding to this regulatory pressure by demanding more independent oversight of compliance in investment management processes as well as collateral management, fund accounting and valuation. Boards are also faced with their own gaps in knowledge about how hedge funds operate, leading them to hold back investments while they work to increase their understanding.
Ivo Jenniskens, investment manager at Providence Capital said: "From what we have experienced with a pension fund as one of our clients, the regulatory environment in the Netherlands is not very positive for pension funds to invest in hedge funds. This pension fund was invested in hedge funds. Despite the fact that they outperformed the markets, including in 2008, the pension fund had to sell almost its entire hedge fund exposure because the regulator, the Dutch Central Bank, sees hedge funds as a higher risk than equity. Pension funds have to keep more collateral for hedge funds, it weights heavier in their risk budget than for equity. The regulator says to those who are invested in hedge funds, 'we do not know what these hedge funds are exactly doing,' and the pension fund should know that. For smaller pension fund Board...................... To view our full article Click here
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