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
Date Written: September 25, 2012
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: Suggested Citation