EUROPE - The financial crisis may have ended the extensive growth in alternative investments seen over the last years, Pensionskassen have suggested to IPE.
"There is a certain disillusionment regarding the alternative sector and none of the investments can be excluded as even former high-flyers are facing problems now," said Günther Schiendl, CFO at Austria's largest Pensionskasse VBV.
In the hedge fund sector he sees a trend away from multi-strategy approaches towards more focussed strategies.
VBV's exposure to hedge funds now stands at 7-10% and that's enough, Schiendl noted.
At the Swiss Bernische Pensionskasse (BPK) the crisis has not altered CFO Hans-Peter Wiedmer's view on alternatives: "I am sceptical towards hedge funds as they cannot lift the risk from the pension fund and are expensive. When you understand their investment strategy it is better to reproduce it yourself as transparency is a problem."
"No animal should give money to the monkey if it cannot climb the tree itself," Wiedme said, quoting an African proverb.
He also pointed out that in many investment categories the well performing funds are closed ones and it is difficult for Pensionskassen to identify the best managers as the funds are sold by sales people and the managers seldom come to the pension funds themselves.
Wiedmer, whose fund has moved all investment management in-house, added the problem of understanding investment processes was similar in the field of private equity.
"A few managers know where the risk in these investments is as they are entrepreneurs themselves. Furthermore private equity are very illiquid investments and in the current market environment we have seen the importance of liquidity."
Schiendl said private equity is "uninteresting" at the moment because of financing problems but 2010 one could look into certain strategies within the asset class again.
"There won't be a significant increase in alternative investments," Schiendl is convinced.
However, he noted infrastructure was interesting at the moment as long as it was well structured and transparent.
He also sees good investment opportunities in real estate at the moment as "some good properties have to be sold by investors under financing pressure".
Regarding commodities Schiendl is cautions as there are some studies which suggest that ETFs for this asset class "have contributed to the build-up and then bursting of the bubble".