U.S. companies from Ford Motor Co.to supermarket chain Kroger Co.have boosted their pension plans’ bets on hedge funds, a shift that left many of them on the short end of a stock-market rally.
Large corporate pension funds have quadrupled the share of their portfolios invested in hedge funds over the past five years, according to an analysis of about 300 firms in the S&P 500 by Wilshire Consulting. During that period, those pensions have lagged behind the performance of the broader stock market in every year but one, according to Wilshire. Their return of 9.7% in 2014 was below 13.7% for the S&P 500, including dividends.
“There’s certainly regret,” said Jim McKee, head of hedge-fund research at Callan Associates Inc., which advises pension funds. “The last five years have been disappointing for pensions invested in hedge funds.”
