State of Wisconsin Investment Board, Madison, could search for 25 hedge fund managers over the next 36 months under a recommendation to allocate up to 5% of the board's $62.5 billion core fund to absolute-return strategies, according to a board report.
The hedge fund allocation would be the first for the board, which oversees $70 billion in assets.
Fifteen of the managers could be hired in 2010 for an initial 2% hedge fund allocation, with another 10 managers hired as the allocation is increased to 4% to 5% by mid-2011, the report said.
The hedge fund allocation would be diversified among the managers across style, strategy and geography, the report said.
Cliffwater, the board's hedge fund consultant, is assisting in developing policies and an implementation plan for the hedge fund allocation, the report said. Asset allocation consultant Strategic Investment Solutions assisted.
Hedge funds would “reduce variance from equities” and “move assets into higher risk-adjusted strategies for a potentially smooth total fund return stream,” the report said.
The board plans to consider the recommendations Jan. 26, said Vicki Hearing, public information officer.