Pensions Increase Hedge Fund Partnership by Managed Fund Association

According to industry research provider Preqin, public pension funds have increased their hedge fund allocations from $190 billion to $208 billion in the year from May 2015 to May 2016. Globally, 1,155 pension plans are investing a total of $839 billion in the industry, Preqin found.

Public pension funds, in particular, are among the industry’s most important investors, representing more than a quarter of the largest investors. This strengthening partnership is a strong testament to the relationship fund managers have built with their investors.

Preqin’s recent data, covered by the Financial Times, counters the more commonly reported narrative that has focused on the decisions of a few pension plans rather than this class of investors as a whole. The FT notes that despite some high-profile redemptions, “there is more retirement money than ever” being invested with hedge funds and that “more retirement funds are investing a sum greater than $1 billion with hedge funds, instead of cutting back.”

Public pensions, however, are not the only plans increasing their hedge fund allocations. FT also reported that more than half of private sector pensions funds were increasing allocations.

Preqin’s head of hedge fund products said, these plans “are using hedge funds as a way of cutting risk and diversifying their portfolios.”

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