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Pension Officers Putting Billions Into Hedge Funds
From: David Farber <dave () farber net>
Date: Sun, 27 Nov 2005 16:09:44 -0500
hmm, like TIAA. Begin forwarded message: From: Monty Solomon <monty () roscom com> Date: November 27, 2005 12:17:37 AM EST To: undisclosed-recipient:; Subject: Pension Officers Putting Billions Into Hedge Funds Pension Officers Putting Billions Into Hedge Funds By RIVA D. ATLAS and MARY WILLIAMS WALSH November 27, 2005 Faced with growing numbers of retirees, pension plans are pouring billions into hedge funds, the secretive and lightly regulated investment partnerships that once managed money only for wealthy investors. The plans and other large institutions are expected to invest as much as $300 billion in hedge funds by 2008, up from just $5 billion a decade ago, according to a study by the Bank of New York and Casey, Quirk & Associates, a consulting firm. Pension funds account for roughly 40 percent of all institutional money. This month, the investment council that oversees the New Jersey state employees pension fund said it would put some of its money into hedge funds for the first time, investing $600 million over the next several months. While most pension plans have modest stakes in hedge funds, others have invested more than 20 percent of their assets. Weyerhaeuser, the paper company, has 39 percent of its pension fund's assets in hedge funds. In Congress, there has been a push for amendments that would make it easier for hedge funds to manage even more pension money, without having to comply with the federal law that governs company pensions. Pension officials who have been shaken by market downturns and persistent deficits are attracted by hedge funds' promise of richer, or more consistent, returns. But the trend has caused some consultants and academics to voice cautions. They question whether hedge funds, with risks that are hard to measure, are appropriate for pension funds, whose sole purpose, by law, is to pay out predetermined benefits to retired workers. Those benefits are considered so crucial that they are guaranteed: corporate pension failures are covered by the Pension Benefit Guaranty Corporation, a federal agency, while pension failures by state and local governments are covered by taxpayers. Given that the benefits are paid out on a set schedule, critics wonder whether it makes sense to rely on investments whose returns are hard to predict, managed by private partnerships that disclose little about their operations and charge some of the highest fees on Wall Street. ...http://www.nytimes.com/2005/11/27/business/yourmoney/27hedge.html? ex=1290747600&en=f1f8a2ada9436d16&ei=5090
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- Pension Officers Putting Billions Into Hedge Funds David Farber (Nov 27)