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In the week ending 29 July, 2016, new data showed that institutional investors, like pension funds, stay loyal to hedge funds. A long term study from PGIM has found that institutional investors stick with hedge funds despite performance, pointing out that institutional portfolios have been able to reap the rewards of diversification and higher returns. The Researchers considered a variety of alternative strategies and portfolios over the period from Q1 2000 to Q1 2015 and found that macro and relative value strategies seem to be the lowest risk and also had the lowest drawdowns among alternatives over the study period.

Preqin data showed that public pension funds have increased their hedge fund allocations from $190bn to $208bn in the year from May 2015 to May 2016; a new UTIMCO asset allocation sees more private investments but fewer hedge funds; AP1 reported a 3.5% return in the first half of the year, below the 5% achieved for the same period the year before. Fee-conscious smaller institutional investors see new avenue in low cost solutions; and Kern County Employees’ Retirement Association, Bakersfield, Calif., has added private credit allocation and boosted real estate.

Investment returns for West Sussex Pension Fund were flat over the course of the last year; and a European pension fund has tendered a $100m actively managed hedge-fund mandate through IPE Quest.

Japan’s pension bureau is considering proposals to allow GPIF to engage in alternative investments; Korea Post said it will direct more money into overseas bonds and alternative assets going forward. Also Chinese insurers see their returns tank and are reportedly buying big into alternatives; and Singapore’s sovereign wealth fund has seen a big drop in its five-year annualized return and plans to raise alternatives exposure.

Jeff Feig is ......................

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