Pension schemes stick with hedge funds

By Josephine Cumbo. This article originally appeared on the Financial Times website, on September 19th, 2014

Millions of pension savers in the UK will continue to have their savings invested in hedge funds, an asset class branded “costly and expensive” by influential funds.

The National Association of Pension Funds, which represents 1,300 workplace pension schemes, managing £1tn of savings, said hedge funds “had a role to play” in providing returns for members.

The comments came after Calpers, the largest public sector pension fund in the US, said it was exiting its $4bn hedge fund holding, over concerns that the investments were too complicated and expensive.

The £4.5bn London Pensions Fund Authority – the UK’s most influential public sector pension fund – also branded high hedge fund fees as “unjustifiable”, adding pressure on investors remaining exposed to the assets.

The NAPF, whose schemes covering 15m workplace pension savers, said its members needed a choice of strategies and assets. “Hedge funds can suit some pension schemes but it depends on the specific pension fund,” the NAPF said.

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