UK - Railpen is to invest £400m in hedge funds, as it looks to increase its total portfolio to £1.2bn by December 2007, up from £600m at the end of 2005.
Railpen is the £18bn fund that looks after the retirement savings of 380,000 railway workers.
Railpen chief executive and National Association of Pension Funds (NAPF) chairman Chris Hitchen said: “The increase is part of a more general ongoing diversification strategy. For most sections this involves a reduction in quoted equities in favour of other return-seeking assets.
"We went into infrastructure assets last year, but they’re somewhat overheated, so we’re trying to make sure we don’t put all our money in at the same time.”
Railpen has drawn on models advised by Watson Wyatt and use Blackstone, Grosvenor and Rock Creek to select hedgefunds. Overall it holds around 80 underlying hedgefunds.
A recent NAPF survey indicated that 11% of pension funds had invested in hedge funds by the end of 2006, up from 8% the previous year.
There were also rises in the amount of money that pension funds invested in property, private equity and venture capital as part of a wider move out of equities in 2006.
Railpen targets a return of 4% above Libor.
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