LONDON (Reuters) – Britain’s top local authority pension plans have cut investments in hedge funds in favor of better-performing alternatives, a review of annual reports shows, adding pressure to an industry beset by weak performance, outflows and fund closures.
A Reuters analysis found the value of hedge fund investments at the biggest ten local authority pension schemes in England and Wales fell by 9 percent to 1.5 billion pounds ($1.9 billion) in the 12 months to the end of March.
Schemes - Pounds - Window - Thoughts - UK
The schemes collectively manage 102.7 billion pounds and provide the best window on the thoughts of the UK pensions industry as most other public and corporate pension schemes share little information.
Pension funds are key investors, as they tend to park their money for the long term, and public pension funds account for about a fifth of hedge fund assets globally.
Figures - Signs - Pressure - Hedge - Funds
The figures add to signs of pressure on hedge funds.
Data from industry tracker eVestment showed investors of all stripes pulled $14.8 billion from hedge funds globally in January-November 2018, contributing to a number of high-profile fund closures, including Highfields Capital, Decca Capital and Latimer Light Capital.
Analysis - Reports - November - December - Reductions
The analysis of the annual reports, which were mainly released in November and December, found reductions in hedge fund assets at five of the ten pension schemes, with three cutting the number of hedge funds they invest in.
“The industry has seen some redemptions from pension funds who have not seen enough value for money from hedge funds,” said Sara Rejal at consultant Willis Towers Watson.
Reductions - West - Yorkshire - Pension - Fund
One of the biggest reductions came from the West Yorkshire Pension Fund (WYPF), which cut its investment by half to 127.6 million pounds, from 254.3 million pounds,...
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