Pension Funds' Allocations to Hedge Funds: An Empirical Analysis of U.S. and Canadian Defined Benefit Plans

32 Pages Posted: 25 Aug 2011 Last revised: 27 Dec 2012

See all articles by Vincent Bouvatier

Vincent Bouvatier

University Paris-Est Créteil (UPEC) - ERUDITE

Sandra Rigot

University of Angers - Centre d'économie de l'Université de Paris Nord (CEPN)

Date Written: September 25, 2012

Abstract

This paper investigates the characteristics of US and Canadian pension funds that allocate assets to hedge funds. The typical pension fund that invests in hedge funds is a large sophisticated pension fund that diversifies its portfolio across numerous classes of investments, private equity in particular, uses a core-satellite organization and has access to low delegation costs for alternative assets. Moreover, we find that pension funds investing in hedge funds significantly obtained higher global returns.

Keywords: pension funds, hedge funds, asset allocation, diversi…fication

JEL Classification: G23

Suggested Citation

Bouvatier, Vincent and Rigot, Sandra, Pension Funds' Allocations to Hedge Funds: An Empirical Analysis of U.S. and Canadian Defined Benefit Plans (September 25, 2012). Available at SSRN: https://ssrn.com/abstract=1916686 or http://dx.doi.org/10.2139/ssrn.1916686

Vincent Bouvatier (Contact Author)

University Paris-Est Créteil (UPEC) - ERUDITE ( email )

Mail des Mèches
61 avenue du Général de Gaulle
Créteil Cedex, 94010
France

Sandra Rigot

University of Angers - Centre d'économie de l'Université de Paris Nord (CEPN) ( email )

UMR7115
Université Paris-Nord
Paris XIII
France

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