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Ontario Teachers May Put Another $300 Million in Hedge Funds

Date: Friday, June 11, 2004
Author: Bloomberg

Ontario Teachers' Pension Plan, Canada's second-largest pension fund manager, plans to add as much as $300 million in hedge funds to its holdings this year. The Ontario pension fund has allocated about $3.5 billion to hedge funds since 1996. Hedge funds are loosely regulated portfolios that make bets on falling as well as rising securities prices. They attracted a record $60 billion last year, boosting the industry's assets to more than $800 billion. With institutions pouring money into hedge funds, managers may find fewer market anomalies to exploit, leading to the possibility of lower future returns, said Ron Mock, vice president of alternative investments at Ontario Teachers. The Ontario plan is seeking more ``unique'' investment alternatives, he said. ``When things get too popular, we look elsewhere,'' Mock said in an interview at a conference in Lausanne, Switzerland. He declined to elaborate. The Ontario pension plan manages about $58 billion on behalf of more than 300,000 teachers. Its hedge fund investments have posted annual declines only once -- in 1998, when they fell 0.4 percent. The funds gained 12 percent in 2003 and rose 3.5 percent during the first three months of this year, Mock said. In all, Ontario Teachers' investments climbed 18 percent last year, as the rising stock market and Canadian dollar helped the fund post the third-best performance in its 14-year history. Income from investments was a record C$11.4 billion ($8.4 billion) in 2003 and net assets increased to C$75.7 billion. To contact the reporter for this story: Samantha Lafferty in London slafferty@bloomberg.net. To contact the editor of this story: Tim Quinson tquinson@bloomberg.net.