Big European Pension Quits Funds Of Hedge Funds

Aug 3 2010 | 3:50am ET

In another blow to the embattled fund of hedge fund industry, one of Europe’s largest pension funds has pulled more than US$500 million from funds of funds, its entire investment in the asset class.

The Rabobank Penioenfonds, which manages more than US$15 billion, has ended its relationship with its five fund of funds managers, Financial News reports. The pension disclosed its decision in its annual report, which was published last week.

The Rabobank pension said it “had doubts about the added value of this asset class, and its use in diversification, and the lack of transparency of the hedge fund industry in general.”

The funds of funds managing the pension fund’s millions lost 12.5% in 2008, after which the scheme decided to stop adding to its investments. The return was “better than the return of a large number of other asset classes, but unfortunately there is no absolute positive return,” the Rabobank pension wrote in the report. “This is disappointing, since hedge funds generally were considered able to give a positive return regardless of market conditions.”

The pension has redeployed its fund of funds investments into equities.

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