GM Stays in Pension Business

Chidem Kurdas

As General Electric Co. sells financial assets and gets out of the loan business, people who are in a position to buy such assets may be curious as to whether other industrial companies will spin off their finance operations.

Thus a subsidiary of General Motors continues to manage assets for institutions. The largest of its hedge fund investment vehicles had $5.17 billion in assets as of the end of March, up from $4.76 billion a year ago.

GM entered asset management primarily to deal with its own large pension assets and liabilities. Investing in hedge funds was part of an effort to diversify the pension portfolio. Once GM Asset Management became established, however, it offered its services to other retirement systems and institutions.

Will it continue as an indirect subsidiary of the auto manufacturer? Or will it be spun off?

The GM fund of hedge funds is successful compared to its peers, making over 10% in fiscal year 2014, 6.68% in fiscal 2015. It is invested with around 75 managers. The largest investment – the only one accounting for more than 5% of total capital – is in a long/short equity fund managed by Andreas Halvorsen’s Viking Global.

But the fund of funds has not grown much in the past few years. Capital inflows were at only $100 million in the 12 months though March. It might raise more money as part of a big asset management company.

Then again, managing GM’s own pension may be top priority. When the carmaker went bankrupt in 2009 amid the crisis, the federal government backed the pension liabilities as part of the bailout. But managing the assets to cover the liabilities is still the preferred route.

Tags: ,

Leave a Reply

Please log in using one of these methods to post your comment: Logo

You are commenting using your account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s

%d bloggers like this: