Pensions Like Their Alternatives Traded

Chidem Kurdas

No wonder so many managers want to have an initial public offering. Pensions may be more likely to buy a traded security than invest in  private funds. Some of the largest retirement systems have very small percentages of assets in hedge funds but do hold public shares in asset companies that manage alternatives.

Thus the IBM retirement plan in 2011 had  around 3% in hedge funds out of over $50 billion in US assets (the non-US plan is separate). The pension goes for low-fee index investments like the Vanguard international equity index and has an extensive portfolio of financial stocks, among them the asset manager BlackRock.

New York State Common Retirement Fund, the third largest pension plan in the country with $150 billion in assets, owns Apollo Investment Corp., the publicly traded debt vehicle managed by the private equity firm, and BlackRock, which seems to be a favorite among pensions.

The $230 billion California Public Employees Retirement System owns Och Ziff, the hedge fund manager, and BlackRock. Despite years of publicity about its hedge fund investments, CalPERS has only 2% in absolute return strategies according to the latest available data.

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Tags: Apollo, BlackRock, California Public Employees Retirement System, IBM, New York State Common Retirement Fund, Och-Ziff Capital Management, Vanguard