Nevada Schools Slash Hedge Fund Allocation

Oct 20 2010 | 12:49pm ET

Nevada’s public university system is cutting back on its hedge fund investments.

The Nevada System of Higher Education will liquidate the $105.8 million in absolute return investments in its operating pool. It’s a big move for the system: The hedge funds make up more than one-fifth of the pool’s $500 million, HFMWeek reports.

The move follows a recommendation from the system’s adviser, Cambridge Associates, which was “not entirely comfortable with the manager concentration in the portfolio as it currently stands.”

“Two managers is too few given the level of risk in this asset class,” according to the minutes from the board of regents’ June meeting. Those two managers are Farallon Capital Management and Och-Ziff Capital Management. NSHE will also redeem its investment in the Forester Diversified Fund.

The Nevada schools will maintain their hedge fund investments in its endowment pool. The system has $25.7 million invested in two hedge funds at the much smaller endowment.

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