The sponsors of these funds, unfortunately, often boast of their prowess at investing in hedge funds and other alternatives.
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The rule would restrict banks from trading with their own capital, known as proprietary trading, and investing in hedge funds and private equity.
Only once you understand the mechanics of pension investing in hedge funds can you appreciate how radically such investing is undermining traditional fiduciary standards.
Generally pensions investing in hedge funds of funds do not receive the audited financials of the underlying funds or monthly or quarterly performance reports.
Finally, investing in hedge funds can pose operational risk: risk of investment loss from inadequate or failed internal processes, people and systems, or problems with external service providers rather than an unsuccessful investment strategy.
Articles in Institutional Investor show that more traditional asset managers, like pension funds, are buying real estate, investing in hedge funds, distressed debt and CLOs again and in hedges for their book, she added.
In defense of Paulson, he is a hedge fund manager and anyone who invests with him should realize that there is significantly more risks investing in hedge funds and should stay away from strategies like his if they are unable to accept the severe volatility.
Third, any foreign money coming into Chile must stay in the country for at least one year, a requirement that has discouraged many hedge funds and pension funds from investing in Chile at all.
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For investors such as pension funds, buying a stake in a listed entity may appeal if their internal rules stop them investing directly in private-equity or hedge funds.
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In our opinion, at most, only one fund of funds makes sense for pensions investing a limited portion of their assets in hedge funds.
Rather, some half of hedge funds investing in Japan had net inflows and a core growth rate of 3.8%.
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Paul Lavin of WestLB Mellon Asset Management has found a close correlation between the performance of hedge funds investing in shares and the breadth of the stockmarket.
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But much of that performance was based on investing in alternative assets, like hedge funds, leveraged buyout funds and other exotic financial instruments that plummeted during the recent financial crisis.
Much of it these days is in the hands of private-equity and hedge funds, which are often investing in growth.
Indeed, by enabling a match between returns and liabilities, investing in the healthcare sector may be natural hedge for pension funds.
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Paul Smith of TripleA Partners, which advises foreigners on investing in Asian funds, says there is twice as much money looking for long-only funds as for hedge funds.
For example, virtually every state pension that I know of has told locals, including participants and taxpayers, that investing in high-risk, high-fee, leveraged hedge funds is, in fact, a conservative investment strategy.
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Indeed, for private and public pension funds including Social Security, investing in healthcare companies could be the ideal natural hedge to their growing liabilities.
Some investors are trying to reduce their portfolio's volatility by seeking refuge in a little-known corner of the investing world: mutual funds designed to perform like hedge funds.
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