UK - The £4.5bn West Yorkshire Pension Fund is set to invest up to 5% of its assets in hedge funds to boost returns and diversify its risk.
The fund is planning to invest up to £225m in fund of hedge funds over the next three to four years - one of the largest investments in the asset class by a local government scheme.
Bfinance will manage the selection process for the scheme, which will be done through open tender.
The move comes despite the drop in hedge fund performance over the past year.
WYPF investment panel chairman Ian Greenwood explained: “Despite some uncertainty over recent months as to the performance achieved by hedge funds, we feel the timing is now right for us to invest in them.”
WYPF head of pensions and investments Stuart Imeson added: “The decision has been taken to invest in hedge funds as a means of further diversifying the overall investment portfolio of the fund, and to seek to achieve ‘alpha’ in terms of investment returns with little added volatility.”
The scheme is the latest in a line of local authorities to invest in the asset class.
These include the £620m Shropshire County Council Pension Fund, which has already invested £61m in hedge funds and the £345m London Borough of Brent Superannuation Fund, which has allocated £17m to a fund of hedge funds.
Additionally, the £900m Dorset County Council Pension Scheme appointed Pioneer Alternative Investments managers to run a £22.5m hedge fund brief last week.
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