UK - The £7bn ($11bn) West Midlands Pension Fund has invested £40m in a global long-short equity fund of hedge funds run by Goodhart Partners.
Chief investment officer Judy Saunders said the appointment was part of its strategy of having a few specialist equity funds alongside passive management.
The WMPF has a total of £400m invested in hedge funds - equating to around 6% of the total assets under management.
Saunders explained: "We view hedge funds as an investment process not an asset class. Hedge funds are therefore found in a number of different portfolios including the absolute return strategy portfolio, global equities and commodities. Most of the hedge funds we have invested in are single strategy rather than funds of funds."
She added: "The West Midlands Fund revised its benchmark in January to include an 8% allocation to absolute return strategies, which also includes non-hedge funds. Its benchmark is: 50% quoted equities, 10% private equity, 15% fixed interest and 25% alternatives split between property, infrastructure, emerging market debt, commodities and absolute return strategies."
Saunders said the WMPF would review the present strategy after the next valuation, planned for 2010.
This comes after Railpen Investments - which manages the assets of the Railways Pension Scheme - invested £65m in the same Goodhart fund in August.
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