U.K. Universities Pension Plans Big Hedge Fund Investment

Jan 26 2010 | 12:38pm ET

A major British pension fund is increasing its hedge fund investments fivefold, pouring more than £1.4 billion pounds into the asset class.

The £28 billion University Superannuation Scheme said it would invest that amount in fixed-income as it seeks to reduce its 70% equity exposure. But the pension’s chief investment officer said it would move a similar amount into hedge funds, which currently make up just 1% of the fund’s investments.

Roger Gray, who took over as CIO less than five months ago, told Reuters that USS has made its first active hedge fund investment totaling in the “hundreds of millions” of pounds. USS will increase its hedge fund investments to 5% of total assets, meaning the pension may hire up to 30 hedge fund managers over the next two years.

USS will also continue to invest in a hedge fund replication strategy managed by State Street.

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