Mass. Pension Votes To Directly Invest In Hedge Funds

Apr 6 2011 | 3:51am ET

Massachusetts is quitting funds of hedge funds.

The Bay State’s main public pension plan said it would begin phasing out its use of funds of funds with $500 million in direct hedge fund investments. The Massachusetts Pensions Reserves Investment Trust, which has $49.5 billion in assets, $3.8 billion of which are in funds of funds, hired adviser Cliffwater yesterday to begin the transition.

The move will save part of the 0.84% in additional fees to funds of funds that Massachusetts pays. Instead, Cliffwater, which formerly served as the pension’s general consultant, will charge a 10% fee, yielding a saving of several million dollars initially. Cliffwater received a three-year contract.

“We like to have a direct relationship,” Massachusetts Treasurer Steven Grossman said. “We don’t necessarily need the middleman.”

Which, of course, is bad news for Massachusetts’ five middlemen, Arden Asset Management, Grosvenor Capital Management, K2 Advisors, Pacific Alternative Asset Management and Rock Creek Group. The direct hedge fund investments will be funded by reducing their mandates.


In Depth

The Benefits Of Private Debt Investing

May 7 2015 | 10:43am ET

Jeffrey Haas is chief operating officer of Old Hill Partners Inc., an SEC-registered...

Lifestyle

Yale Receives $150 Million Gift from Blackstone’s Schwarzman

May 12 2015 | 12:10am ET

Yale University announced it has received a $150 million gift from Blackstone Group...

Guest Contributor

How To Generate 6% Yield In A Volatile World

May 22 2015 | 6:41am ET

Private credit comes in many different flavors, all with the common themes of over...

 

Editor's Note