Calpers is not alone in its retreat from hedge funds. The UK’s £20bn Railways Pension Scheme wants to reduce its £1bn exposure. The same is true for the £39.6bn BT Pension Scheme and the third-largest pension fund in the Netherlands, PMT, with €55bn.
Such institutional rumblings should not come as a surprise. Last year’s survey revealed the paradox of rising net flows into an industry delivering lacklustre performance while stocks continued to shine for a fifth straight year.
BarclayHedge reports hedge fund asset growth in 2014 is set to accelerate past the 8.35 per cent annual expansion rate witnessed since 2008. This is occurring despite hedge funds continuing to underperform the S&P 500 for the sixth straight year. In the year to November, the average fund was up 3.5 per cent while US stocks rose nearly 14 per cent. The MSCI World Index in dollars was up over 7 per cent.
