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Alternative Market Briefing

US public pensions up commitments to hedge funds by $2.2bn in Q3, taking the YTD total past $10bn

Thursday, November 26, 2020

Laxman Pai, Opalesque Asia:

Interest in credit hedge funds takes YTD allocations past $10bn: US public pensions increased gross commitments to hedge funds by $2.2bn in Q3, taking the YTD total past $10bn, said a study.

According to HFM Insights' latest report, credit and real estate hedge funds have been of increasing interest throughout the year. Combined, they attracted $900m in Q3 (41%) and $3.6bn YTD (34%).

On balance, North American institutional allocators viewed hedge funds more favorably in Q3 than they did at the start of the year. However, the asset class still divides opinion, with a relatively high proportion of investors, one-quarter; viewing hedge funds less favorably.

Oregon's public pension fund awarded the largest single hedge fund mandate in Q3 and is still $2bn shies of its target allocation for diversifying strategies. Its search activity is now on hold until a dedicated hedge fund consultant has been secured (due this quarter).

Several other US publics awarded large tickets in Q3. If discontinued mandates are included, YTD commitments are net positive at $1.1bn. This inflow is largely due to credit and real estate hedge fund commitments; without them, YTD flows are net negative, at -$1.2bn.

The study pointed out that many plans remain interested in credit and macro hedge funds, but opportunities for managers to win new institutional clients in Q4 (and likely Q1 2021) will be severely limited by second and third waves of the......................

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