03-14-2008 | Source: Hedge Fund Daily
Real estate is by far the most popular alternative investment among public pension plans in the U.S. and Canada. According to a survey by Bear Stearns’ Pension, Endowment and Foundations Services Group and the Government Finance Officers Association, 85% of respondents identified real estate as their favorite alternatives asset class, followed by private equity (60%), venture capital (44%) and hedge funds (42%). Overall the study found that 52% of the 150 public pension plans polled either invest or plan to invest in alts. The 48% that do not invest in alts explain that either they are barred by law or by investment policy from doing so or other reasons, such as the conservative nature of their board of trustees. In other findings:
- 35% of plans invest directly in hedge funds, with the top three strategies being multi-strategy, long/short equity and market neutral.
- 53% invest in funds of hedge funds.
- 12% say they use 130/30 strategies, with 58% responding that they were considering it and 30% nixing them altogether.
- 80% of the plans are advised by consultants for investment decisions, while 70% use consultants to perform due diligence on prospective manager.
- 15% say they are not currently using any risk-management tools, while 5% replied that they have internal measures in place.
- Firm reputation was mentioned as the most important trait for a hedge fund manager, with performance and quality of HF personnel tied for second.
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