If at first it fails to work as designed, to blow up, then simply add more ingredients, and eventually ...
news.ft.com
QUOTE
Calpers may put up to $5bn into hedge funds
By Simon Targett in San Francisco
Published: July 1 2001 19:45GMT | Last Updated: July 1 2001 21:32GMT
The California Public Employees' Retirement System (Calpers), one of the world's biggest pension funds, is prepared to put up to $5bn into hedge funds.
The move would represent a significant boost to the industry and underlines the fact that hedge funds have recovered from the credibility blow three years ago after the near collapse of Long Term Capital Management, a US hedge fund.
It also points to the growing interest of leading institutional investors in an alternative investment that has traditionally been used by super-rich individuals.
Two year ago, a senior Calpers investment officer recommended that it put more than $11bn into hedge funds. But when Calpers unveiled its first commitment last November it was for just $1bn.
Calpers is close to completing a deal with Blackstone Alternative Asset Management, a New York-based adviser, to assist with its first $1bn hedge fund programme.
But, in an interview with the Financial Times, Daniel Szente, Calpers' chief investment officer, said the pension fund "would put between $3bn-$5bn into hedge funds if the market had room for it."
Calpers, which has $151bn of assets, has about $70bn in index-tracking funds, which deliver low but reliable returns. However, it is under pressure to achieve greater returns from its investments in order to provide the pension benefits for 1.2m public sector workers in California.
Mr Szente said that in the future - probably between 2004 and 2008 - Calpers would have to start selling assets in order to pay for the public sector workers' pension benefits. In the meantime, he was keen to extract greater value from the assets, which reached a peak of $172bn last year, before the market fell.
A $5bn investment in hedge funds would represent only 3 per cent of Calpers' assets, but Mr Szente said that, even with just $1bn, the strategy "was worth it: because of our size, we can pay a lot of benefits."
Calpers is looking to put between $50m and $100m with 10 to 15 hedge fund managers. But its equity investment team can put up to $200m in a single fund before seeking fresh approval from Calpers' board.
Blackstone will, over the next year, help Calpers to find the best managers and monitor their performance. It has access to some of the top names in the hedge fund industry.
UNQUOTE |
