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Impact Investing

IPE special report May 2018

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Pension funds seen as dominant hedge investors

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EUROPE – The “clear majority” of European institutions which invest in hedge funds are pension funds, a new survey says.

Initiative Europe said 47% of the 73 institutions which invested or planned to invest in the asset class were pension funds. It cited the diversification called for by the 2001 Myners Review and funding deficits caused by bear markets.

Pension fund managers accounted for seven percent by institution type. Asset managers and insurers both accounted for 10%. Other investors were trust companies, family offices, investment funds, charities and private banks.

The group surveyed 100 European institutional investors in the first quarter of 2004. Of that number, 73 institutions, representing 583 billion euros in assets, were either already investing in hedge funds or were “seriously considering” doing so in the next six-12 months.

It said hedge fund investments by these institutions currently total 4.3 billion euros. Twenty-five of the institutions were UK-based, 13 in the Netherlands, eight in Sweden and six in Switzerland. “European institutional investment in hedge funds for the first quarter of 2004 was dominated by institutions from Northern Europe.”

Large pension funds in the UK such as the BT Pension Scheme and Railpen have recently decided to allocate hundreds of millions of pounds to the asset class.

Meanwhile Standard & Poor’s has said hedge fund performance was unusually closely correlated to equities in March.

“March hedge fund performance as measured by the Standard & Poor’s Hedge Fund Index (S&P HFI), showed an unusually close correlation to equity performance, ending the month down 0.12% under increased geopolitical concerns and volatility in equity markets,” S&P said.

The first-quarter return for the index was 1.9%, compared to a 1.3% return on the S&P 500.


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