Pension Officers Putting Billions Into Hedge Funds

[David Farber <dave () farber net>]

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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