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A billion-pound show of confidence

Date: Tuesday, March 3, 2009
Author: Hedgeweek.com

Amid the constant flow of bad news for the hedge fund industry comes a shot in the arm for the sector, with the news that the UK's second-largest pension fund, the Universities Superannuation Scheme, is moving ahead with its plan to double its exposure to alternative assets such as infrastructure and private equity, and now hedge funds as well.

The pension scheme, which has GBP23bn in assets, has announced that it has recruited Emily Porter, previously an investment director at Key Asset Management as a portfolio manager for its absolute return strategies programme - the first in a series of planned hires to build up the scheme's in-house hedge fund investment capability.

The scheme, which acts for 378 universities and academic institutions and has about 250,000 members, already has a relatively high exposure to alternatives at 10 per cent of total assets after investing GBP2bn over the past three years. It plans to increase this of the medium term to 20 per cent, with hedge funds making up about a quarter of the total alternatives allocation.

'We believe that the current turmoil in the hedge fund industry represents a compelling investment opportunity for investors like USS who are able to take the long-term view,' says head of alternative assets Mike Powell.

It certainly makes a highly welcome change for the talk to be off new hedge fund investments rather than of redemptions, and of the creation of new specialist posts rather than lay-offs. And it may well be that other institutions are out there waiting to take advantage of the opportunities that the past year's market dislocation are creating for investors.