UK - Hedge funds will continue to get the cold shoulder from pension schemes unless trustees' understanding of them is addressed, fund managers believe.
Gartmore Investment Management says UK pension scheme interest in alternative asset classes is being held back by the perceived risk they carry.
Head of hedge funds Martin Phipps said: “There is some education needed among pension funds – investors still don’t understand what hedge funds are, for example.”
He added that pension schemes continue to see hedge funds as a high risk investment even though the market had become much safer.
JPMorgan Fleming’s head of UK institutional investment, Arno Kitts, believes the slow is due to governance models which mean schemes can only make investment decisions after long deliberation.
But Kitts added the level of interest in alternative investments has grown “enormously” over the last 18 months, and some of this is turning into demand.
JPMorgan’s alternative investments, he said, now comprise 3% of its assets under management.
But Lane Clark & Peacock investment partner consultant Paul Haines predicts further caution from pension funds.
He said: “Trustees rightly don’t feel entirely comfortable with hedge funds and private equity, so before they put such vehicles in place, they want to monitor them.”
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