GLOBAL - The vast majority of pension funds have not invested in 130/30 (and similar) funds and have no plans to, found the results of the latest Global Pensions 100 Panel.
Some 68.8% of respondents claimed they had no plans to invest in the strategies, which have been pushed for some time now by certain asset managers and consultants as a new investment paradigm.
Only 12.4% of respondents said they had invested in 130/30 and related products, while a further 18.8% said they planned to in the future.
Most managers have jumped on the bandwagon, with Investec Asset Man-agement’s Investec Global Extension Fund the latest in a long line of offerings.
However, according to the panel survey, product availability would thus far seem to far outweigh investor demand, despite the fact several high profile pension funds have allocated to 130/30 strategies recently.
Among them, Sacramento County Employees’ Retire-ment System (SCERS) announced in July it was planning to treble its allocation to alternative investments.
At the time, Jeff States, chief investment officer for SCERS, told Global Pensions: “We have a lot of the allocation in indices and we want to look at reducing this and to start using 130/30 strategies and portable alpha.”
Unfazed by the survey results, Mark Roemer, portfolio manager, systematic, at Nicholas-Applegate Capital Management, insisted it was early days for 130/30 strategies.
“Actually I find the percentage of pension plans invested or planning to invest in 130/30 strategies remarkably high given the comparatively short history of these strategies,” he stated.
“Typically, consultants and plan sponsors require a substantial amount of time to evaluate how a new investment strategy might fit within their overall asset allocation and to perform the requisite manager due diligence. Recall how slowly plan sponsors and the consultant community waded into the alternatives arena.”
Roemer predicted the uptake of the strategies would pick up: “Plan sponsors investing today are doing so largely on faith, since few managers have compiled a performance track record of significant length. I expect that as the performance benefits of 130/30 strategies are realised, the pace of adoption will accelerate.”
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