Railway Pension Investments plans to hire about seven hedge funds this year to manage £450 million ($683 million) in assets.
The move comes as Railpen, which oversees assets for the £18 billion Railway Pension Trustee Co., London, seeks to cut costs by shifting from investing exclusively in hedge funds of funds.
“We'll end up with roughly half of our hedge fund assets in the fund of funds, and roughly half in direct hedge funds,” Chief Investment Officer Keith Shepherd said in a telephone interview.
Railpen invests about £1.6 billion in hedge funds, including £350 million managed directly by three hedge funds it hired in the past year. Another £1.3 billion is invested through two funds-of-funds managers. Over the rest of the year, that will be reduced to about £800 million, overseen by one hedge funds-of-funds manager, Mr. Shepherd said.
Among the styles Railpen will consider, he said, are equity market neutral and multistrategy funds. Railpen hired consulting firm Albourne Partners to help in the search.