Illinois Eyes Pensions' Hedge Investments

Mar 23 2012 | 11:28am ET

A shakeup at Illinois' state pension plans—prompted in part by one's enormous allocation to hedge funds—may imperil the hedge fund investments of all five.

A new investment committee will review the pensions' hedge fund portfolios, HFMWeek reports. "There are legitimate questions about whether or not some investment strategies used by some of our pension funds have been overly aggressive, and with a pension unfunded liability well above $80 billion, the last thing we need to incur is additional liability," investment committee Chairman Tom Cross, the Republican minority leader of the Illinois House of Representatives.

Cross was likely talking about the Illinois Teachers Retirement System, which faces a 53% shortfall and has about 28% of its assets invested in hedge funds.

Another committee member, Marc Levine of the Illinois Policy Institute, called that allocation "worrisome."

"Trying to fix our overwhelming pension deficits by taking more risk makes no sense," he said. "Higher risk may bring higher returns during good times, but at the cost of larger losses. Further, gaining an extra percentage point or so over time is negligible relative to the scale of the problem."


In Depth

Q&A: Decathlon Capital On Revenue-Based Alternative Lending

Oct 30 2017 | 3:49pm ET

The explosion in private credit activity since the end of the financial crisis is...

Lifestyle

CFA Institute To Add Computer Science To Exam Curriculum

May 24 2017 | 9:25pm ET

Starting in 2019, financial industry executives sitting for the coveted Chartered...

Guest Contributor

CAIS: How Technology is Disrupting the Alternative Investment Industry

Nov 7 2017 | 5:35pm ET

If there’s one thing that alternative investment professionals can agree on, it...