US - The City of New Haven's Employee Retirement Fund (NHERF) has invested US$8m in a hedge fund replication strategy based on exchange traded funds (ETFs) marking the scheme's first foray into hedge funds.
The investment will be through a managed account vehicle provided by IndexIQ, which will invest in a range of ETFs.
Ameriprise Financial Services - which advised NHERF in this deal - consultant Derek Ciampini said: "In today's economic environment, it is especially important for trustees to be open to examining alternatives as part of their investment allocation to ensure it has the proper diversification to meet the evolving needs of their fund."
IndexIQ executive vice president Anthony Davidow said: "The City of New Haven was contemplating adding hedge fund exposure to its Retirement Fund, but was leery about the recent difficulties of other public funds. The Trustees were attracted to the investment merits of hedge funds, but were concerned about liquidity and transparency."
Hedge funds replication products have been used by pension funds in the past to get a first exposure to the asset class, while at the same time maintaining a higher level of liquidity and transparency.
Last year a growing move by pension funds towards hedge fund replication prompted a warning they could be missing out on the returns offered by direct allocations to the asset class (Global Pensions, September 1, 2008).
According to the latest Credit Suisse/Tremont Hedge Fund Index hedge funds performance were up 2.11% in November and 17.53% year to date.
The Financial Conduct Authority's (FCA) final report on its asset management study has been dubbed a turning point for cost transparency, but some have warned its actions are lacking.
The Financial Conduct Authority (FCA) has published the proposed reforms put forward by the big three investment consultants as it seeks industry views on whether to reject them.
The Financial Conduct Authority's (FCA's) provisional decision to refer the investment consulting market to the Competition and Markets Authority (CMA) has largely been welcomed by the industry.
The industry should look to encourage diversity and appointment of young trustees through recruitment at the grassroots according to a panel of trustees at Pensions and Benefits UK.