The pace of investment in hedge funds and funds of funds by the top 200 U.S. pension funds remained nothing short of blistering.
Investment in hedge fund vehicles reported by the largest U.S. funds increased 46.5%, to $21.1 billion as of Sept. 30, from $14.4 billion a year earlier. That figure would rise by least $3 billion if assets were added from pension funds known to be invested in the asset class but that did not disclose that data on Pensions & Investments' questionnaire.
The 46% growth rate, however, actually represents a decline from the 69.4% rise for the 12-month period ended Sept. 30, 2003. Despite the dip in the overall pace, however, 13 of the 31 funds reporting hedge fund investments were doing so for the first time and six plans reported increases of more than $200 million.
Defined benefit plans reporting hedge fund investments to P&I for the first time are:
• Verizon Communications Inc., with $1.3 billion;
• the Massachusetts Pension Reserves Investment Management Board, with $1.3 billion;
• the Virginia Retirement System, with $1.1 billion;
• Boeing Co., with $823 million;
• ITT Industries Inc., with $387 million;
• the State of Michigan Retirement Systems, with $359 million; and
• the Alaska State Pension Investment Board, with $300 million.
Top 200 defined benefit plans that significantly increased their hedge fund investments included: the Pennsylvania State Employees' Retirement System, up $1.8 billion, to $4.8 billion; Teacher Retirement System of Texas, up $155 million, to $1.15 billion; Missouri State Employees' Retirement System, up $269 million, to $866 million; and the World Bank fund, up $208 million to $802 million.