Just one-third of global pension funds invest in hedge fund of funds, and many of those funds aren't fully satisfied with the investments, according to a new survey of global plans by Mercer Investment Consulting. Less than one-quarter (23%) of pension fund executives who invest in hedge funds of funds were satisfied with the investment returns, and 47% reported overall satisfaction with the investments.
Fees also are a source of dissatisfaction: 35% of respondents who invest in hedge funds of funds said they were unhappy with fees. And 60% of respondents whose pension plans don't invest in the vehicles now said fees are the biggest barrier to funds of funds investments.
In addition, 42% of all respondents said they fully understand the investment strategy of their fund-of-fund managers. But Mercer researchers noted in their report on survey results that this figure varied regionally, from about two-thirds who lack complete understanding of the investment approach in Europe and Japan to about 15% in Australia and New Zealand.
At the same time, 54% of pension executives surveyed plan to increase their hedge fund allocations within the next two years. And of the pension plans not currently invested in hedge fund of funds, 19% said they expect to do so within the next two years.
Mercer surveyed more than 180 large pension plans from around the world in January.
