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
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: Suggested Citation
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