San Francisco Puts Hedge Funds On Hold

Oct 9 2014 | 10:42am ET

The San Francisco Employees’ Retirement System has tabled a proposal to invest $3 billion in hedge funds.

The move came a day after it was reported that consultants advising the city on the hedge fund investments actually run a Cayman-based hedge fund.

The investment, pushed by SFERS CIO William Coaker, was opposed by pension beneficiaries who spoke at the Wednesday meeting of the $20 billion pension's board. According to the International Business Times, opponents cited financial risk and potential conflicts of interest in opposing hedge fund investments.

The Service Employees International Union, which has 12,000 members eligible for SFERS benefits, asked city officials to hire a consultant to evaluate the hedge fund proposal.

The proposal has also attracted a very high-profile critic: Warren Buffett recommended SFERS avoid hedge funds.

The move follows the decision of the country's largest public pension, the California Public Employees’ Retirement System, to exit its external hedge-fund program, saying such investments did not make sense for a system of its size.

SFERS board member Herb Meiberger told IBTimes that while the hedge fund initiative has been tabled for now, the board's president, Victor Makras, still retains the power to bring it up for a vote in the future.

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