Mass. To Cut Funds Of Funds In Favor Of Direct Bets

Mar 26 2012 | 2:06pm ET

Massachusetts' main public pension fund is all but quitting funds of hedge funds.

The $49.8 billion Massachusetts Pension Reserves Investment Management Board voted last week to move an additional $2.7 billion into direct hedge fund investments. The money will come from four of the plan's five funds of funds, which will lose their mandates.

MassPRIM said it would terminate Arden Asset Management, Grosvenor Capital Management, K2 Advisors and Rock Creek Group, which manage in excess of $2.8 billion. The pension will retain PAAMCo, whose emerging managers program is "highly complementary" to its direct hedge fund portfolio, according to agenda materials obtained by Pensions & Investments.

The new direct hedge fund investments will come over the next 15 months. MassPRIM has hired 21 hedge funds over the last six months, and is poised to hire another two—Wasatch Advisors and Acadian Asset Management. If approved, Wasatch will get $140 million and Acadian $60 million.

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