The 50 largest US public pension funds have only invested an average of 2 percent of their assets in hedge funds, according to the latest InvestHedge survey, with less than half of them investing in hedge funds at all.
The 44 percent that do invest in hedge funds have so far together invested more than $23 billion. But that still represents only a tiny proportion – less than 1 percent – of the $2.4 trillion in assets managed by US pension funds.
That said, survey responses indicate that the coming year could see at least another $12.6 billion invested by these institutional investors if they choose to meet their target asset allocations. Amounts invested range from $3.7 billion by the California Public Employees’ Retirement System to $50 million from the Ohio Public Employees’ Retirement System.
“Despite fears on Capitol Hill and elsewhere that pension funds are taking on too much risk with individual’s retirement savings, public pension plans are becoming more comfortable with introducing hedge funds to their asset mix in a variety of ways,” said Susan Barreto, deputy editor of InvestHedge and author of the survey.
Pennsylvania State Employees’ Retirement System is one of the more adventurous investors with 21 percent of its assets invested in hedge funds, although most have just started dipping their toe in the water. Of the 22 US public funds surveyed by InvestHedge that do invest in hedge funds, many say they have only just begun exploring the sector.