Money managers under the microscope
Pension schemes are moving away from the usual equity/bond/real estate mix to put their eggs in as many baskets as possible. No wonder then that the USS — the 31.6 billion pounds UK universities pension fund — is putting an extra 1.5 percent of its assets, or about 474 million pounds, into hedge funds, as its CIO Roger Gray tells Reuters.
If you are rushing to the phone to pitch business with Mr Gray, however, STOP a minute fund manager: be prepared, the USS is not only eyeing alpha, it is going to ask a few questions about how alpha is distributed and how investors are protected.
“Is the board of the hedge fund constituted in a way which gives us assurance that they are actually acting in the interest of the limited partners rather than in the pocket of the managers?” he said.
Key words for this pitch: governance, transparency, best and practice.
Key advice for this pitch: forewarned is forearmed. (The USS does not seem to need the usual ’caveat emptor’ advice).
News and views on the fund industry from Reuters and elsewhere:
US top pension fund scrutinises Goldman’s business practices - Daily Telegraph
Goldman’s Tourre stripped of City licence - Guardian
Lansdowne builds up Lloyds stake - Reuters
Banks face new taxes to future bail-outs - Reuters
Goldman’s “fabulous Fab” Tourre is off - Reuters
Bear Stearns rejected deal with Paulson – Guardian
Goldman’s Flamand sets up hedge fund - Telegraph
News and views on the hedge fund sector from Reuters and elsewhere:
Hedge funds launch attack on Endemol – City AM
News and views on the hedge fund industry from Reuters and elsewhere:
N.J. hedge fund up 132% last year - Finalternatives
Hedge Funds finish year with a bang - The New York Times
Pension Funds to drive hedge fund growth - Hedge Funds Review
Hot on the heels of USS – the UK’s second largest pension scheme — deciding to go ahead with plans to increase its investments in hedge funds comes news that another large local authority fund had started investing in the freewheeling asset class.
The CIO of the West Midlands Local Authority Pension Fund told us: “My belief in the benefits of diversification has strengthened and I think now is actually a good time to invest in hedge funds as they have been forced to improve their practices and some of the weaker ones have gone.”