More Institutions Dispense with Hedge Funds As an Asset Class

At its February meeting the board and the six-person investment committee of the Employees Retirement System of  Texas made a big decision. They voted to integrate hedge funds across the system’s $24.9 billion portfolio — using them within certain asset classes, like equities and fixed income — instead of simply lumping these investments into a separate allocation.

The Austin, Texas–based retirement fund joins a growing number of U.S. pension funds that are taking a more open approach to hedge fund investing, among them the Teacher Retirement System of Texas and the Virginia Retirement System. The practice is already quite common among foundations and endowments, including such respected university endowments as those of the University of Virginia and the University of   Texas at Austin. At University of   Texas Investment Management Co., CIO Bruce Zimmerman views asset allocation as a matrix, with the market along one axis and investment funds and their liquidity profiles along the other. For example, U.S. equities could include a long-short equity hedge fund, a long-only manager, an activist equity manager and private equity.

Increasingly, investment consultants are encouraging institutional investors to consider putting hedge funds outside the alternatives bucket, especially when it comes to equities. In 2011, Norwalk, Connecticut–based consulting firm Rocaton Investment Advisors published a white paper suggesting that allocating to long-short equity hedge funds as part of an overall equity strategy could improve risk-adjusted returns.

What’s striking about the Texas Employees move is that the fund only started investing in hedge funds in 2011. In an effort led by portfolio manager and head of hedge funds Robert Lee III, under the direction of then–strategy chief and current CIO Charles Thomas (Tom) Tull, it began by allocating up to 5 percent of its portfolio to hedge funds. “It was done so we could have an isolated experience to get our hedge fund program up and running and get board and staff comfortable,” says Lee, 33, who joined Texas Employees in October 2011, having previously worked at $5.7 billion, Chicago-based fund-of-hedge-funds firm HFR Asset Management, where he was an associate director of portfolio management.

通过last August, Texas Employees had received approval to invest with six hedge fund managers and hoped to make eight to ten new commitments. The strategy has been a success: For the first nine months of the fiscal year, through March, the hedge fund portfolio returned 5.73 percent, compared with 2.54 percent for its benchmark. That performance helped give the board confidence to allow hedge fund investing with the fund’s fixed-income and equity allocations. Lee and his team are now working with the heads of fixed income and equities to find the right hedge fund managers for those asset classes.

随着机构投亚博赞助欧冠资者来视对冲基金作为其传统投资组合的一部分，一些并不总是如此受欢迎或可能在绝对退回的任务中提出问题的策略可以找到更好的家园。以股票为导向的活动管理人员，这往往不会对冲或者对股票市场没有很好的对冲;他们通过迫使投资组合公司的治理或战略变更提供价值。他们的投资风格更为有意义，作为预期与市场上涨和跌倒的分配的一部分。

“动态主义传统上是一种长期，低杠杆式的股本中心投资，这并没有真正陷入绝对返回桶中，”德克萨斯州员工李解释道。但是，Activist Managers与公共股权投资组合融合，它们提供不同的返回流，而不是典型的有效股权基金。

Texas Employees will keep an absolute-return allocation for relative-value, event-driven and other hedge fund strategies that don’t fit into the more traditional asset-class boxes. Right now Lee sees plenty of opportunity for event-driven funds. He finds merger arbitrage particularly compelling because he thinks the markets are at the start of a big M&A cycle.

Although many institutions have long embraced hedge fund investing, some pension funds — especially public ones — remain skeptical. Those investors worry about the risks and high fees associated with hedge funds, as well as the extra effort required to monitor managers who have more investment leeway than their traditional long-only counterparts. Also, many public pension funds must comply with investment restrictions that only local lawmakers can lift.

但是德克萨斯州员工这样的节目可能会有所作为。如果这种相对的新人通过在传统资产课程中使用对冲基金的对冲基金可以超越长期，其他公共养老基金可以重新考虑他们的立场。反过来，外部管理人员将获得比标准5％至15％的对冲基金分配竞标更大的资本池。替代品，符合主流。