The number of U.S. institutional investors with more than $1 billion going into hedge funds more than tripled in the past three years, with combined investments of at least $67.5 billion.More than 30 U.S. institutions have publicly reported having more than $1 billion either invested in hedge funds now or in target commitments to the asset class. That's up from less than 10 in 2003, according to Pension & Investments reports.
There likely are more institutional investors with big hedge fund allocations, but extracting detailed investment information from foundations is difficult. Officials from the largest foundation in the United States, the $29 billion Bill & Melinda Gates Foundation, Seattle, did not return calls for comment, nor did representatives from six other foundations among the 12 largest as ranked by the Foundation Center, New York.
Among the 30 largest hedge fund investors, the $30 billion Pennsylvania State Employees' Retirement System, Harrisburg, had the biggest allocation — $6.1 billion as of Sept. 30, 2005, up from only $340 million four years earlier.
The University of Texas Investment Management Co., Austin, which manages $19 billion for University of Texas entities, is second with $4.8 billion committed as of March 31. About $750 million of that investment is new, resulting from UTIMCO assuming management of a $3 billion operating fund for UT campuses in February, said Bob Boldt, president, chief executive officer and chief investment officer.
Third is the $41.6 billion Massachusetts Pension Reserves Investment Management Board, Boston, which has invested about $2 billion since February 2005 in hedge funds of funds and last month committed an additional $2 billion.
Tops among big university endowments and in fourth place overall is Yale University, New Haven, Conn. It had hedge fund investments totaling $3.8 billion, or 25.7% of its $15.2 billion investment pool, as of June 30, 2005, according to its annual report.
New Jersey Division of Investment, Trenton, is fifth with a $3.4 billion hedge fund commitment.
Princeton University, Princeton, N.J., came in sixth with $3.3 billion, or 29.3% of its $11.2 billion endowment. Harvard University, Cambridge, Mass., is seventh with a $3.1 billion allocation, or 12% of its $25.9 billion endowment.
The $208.3 billion California Public Employees' Retirement System, Sacramento, is eighth with about $2.3 billion invested. In ninth place is Weyerhaeuser Co., Federal Way, Wash., which allocated 43% or $2.3 billion of its $5.3 billion defined benefit plan to hedge funds as of Dec. 25, according to its most recent annual report.
Massachusetts Institute of Technology, Cambridge, rounded out the list of the top 10 U.S. hedge fund investors. The $8 billion endowment invests at least $2 billion in hedge funds, said Allan S. Bufferd, treasurer, in an interview. Mr. Buffered declined to disclose the exact allocation.