INVESTORS – INSTITUTIONAL: Hedge fund losses challenge investors

Mon Apr 16, 2012



For global pensions, the need for alpha has been the catalyst that sparked the hedge fund allocation boom. In 2012, there is every reason for investors to challenge traditional options as to whether an allocator should rely on a specialist consultant, a fund of hedge funds or their own savvy to get the job done. DATA INCLUDES: 2011 hedge fund losses in pension portfolios; Institutional allocations to hedge funds since 2006


Susan Barreto, deputy editor, InvestHedge

It is often said that necessity is the mother of invention. For global pensions, the need for alpha has been the catalyst that sparked the hedge fund allocation boom. In 2012, there is every reason for investors to challenge traditional options as to whether an allocator should rely on a specialist consultant, a fund of hedge funds (FoHFs) or their own savvy to get the job done.

As specialist hedge fund consultants, Albourne, Aksia and Cliffwater were the go-to experts for direct hedge fund programmes over the past two to three years. Now, however, they have to compete with FoHFs that are more eager to act as advisors at little or no cost to end-investors.

The reasons for 2012's pending rethink of who should be pension trustees' hedge fund helpers actually developed in the latter half of 2011, when it became evident that returns were...

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