Pensions Prove Poor In Picking Hedge Funds

Aug 3 2011 | 10:50am ET

More and more pensions are investing more and more money in hedge funds, but they could be doing a much, much better job, according to a new study.

While the average U.S. pension fund's hedge fund investments easily bested the broader markets, they badly trail overall hedge fund returns, according to a Financial Times analysis of a report by three finance professors. U.S. pensions' hedge fund investments managed a 1.9% annualized return from 2000 through 2008, a period in which the average hedge fund rose about 5% per year.

Canadian pensions did even worse, with their hedge funds returning only 0.6% per year. That figure is especially galling for Canada, whose stock market managed a 2.9% annualized return over the period.

The poor returns come as an increasing number of pensions crowd the hedge fund space. In the year that the study began, 2000, only 2% of North American pensions invested in hedge funds. By 2008, more than 20% did so.


In Depth

Why Ponzi Schemes Work: An In-Depth Look At The Allen Stanford Fraud

Dec 21 2014 | 10:30am ET

Texan Allen Stanford first appeared on the radars of financial regulators in 1997...

Lifestyle

Hedgie Funds US Squash Program

Dec 24 2014 | 8:46am ET

Squash, anyone?

Guest Contributor

EidoSearch’s Top Three Market Projections For 2015

Dec 23 2014 | 4:03am ET

It is that time of year again when prognosticators make their big market calls for...

 

Sponsored Content

Editor's Note

    Guidelines for Guest Articles

    Oct 22 2014 | 9:46am ET

    We are always looking for guest articles from hedge fund managers and buy-side firms.

    If you are interested in submitting a contributed piece for possible publication on FINalternatives, please take a look at the specs. Read more…

 

Futures Magazine

December 2014 Cover

Futures 2014 person of the year

Jeff Sprecher was simply looking for a platform to trade energies when launching ICE 14 years ago but it has grown to reach the pinnacle of both the listed futures and equities world.

The Alpha Pages

TAP July/August 2014 Cover

The Alpha Pages Interview: Senator Rand Paul

Senator Paul sat down in the debut series of the Alpha Pages Interview to discuss the broken tax code, regulation surrounding Bitcoin, and his plans for the 2016 Presidential election.