NETHERLANDS - The €200bn ABP pension fund of the Dutch civil servants will further raise its exposure to hedge funds in the future, Edwina Neal, CIO of equities at ABP, said at the Hedge 2006 conference in London. No details were disclosed but the exposure "will rise" she confirmed to journalists.
"Hedge fund managers are connoisseurs of risk. By investing in hedge funds we built a network to the hedge fund community and got access to new innovations,"Neal explained.
Currently ABP has 3% of its portfolio, around €6bn, in hedge funds.
The first investment in 2002 was done via a fund of fund but soon ABP set up an in-house team of 12 experts, which has in the meantime set up the New Holland Capital LLC in New York and is looking exclusively after ABP's hedge fund investments. Today, 85% of investments are directly into hedge funds.
"We do not pick from products that are available on the shelves," Neal explained. "We look for new ideas and strategies. Then we go to the managers and work together to develop new ideas and strategies into products." This has the added advantage of a stronger position for the fund when negotiating manager fees. "We focus on pioneering strategies. Less than half of our hedge fund investments have a track record. But of course we work with established managers that have a track record."
Neal said that ABP's position was special because of the fund's size and its strong balance sheet. Furthermore, she told IPE that the administrative and the investment team at ABP was "very close to the trustees".