CalPERS Decides to End Hedge Fund Investments

Posted on September 19th, 2014 at 7:42 AM

From the Desk of Jim Eccleston at Eccleston Law Offices

The California Public Employee’s Retirement System (CalPERS), with $298 billion of asset under management, plans to sell about $4 billion of hedge fund investments to simplify its portfolio and reduce investment costs.

 In the fiscal year that ended June 30, CalPERS reported an 18.4% return on investment, far higher than its goal of a 7.5% average annualized rate of return. However, hedge funds during the same period earned 7.1% and racked up $135 million in fees.

After the financial crisis, CalPERS slowly has adopted a less risky approach. It has reduced its risky, money-losing investments and has concentrated on steady, income-producing commercial investments.

Hedge funds, which generally invest in a wide variety of speculative markets, and charge high management fees plus an additional percentage of the partnership’s profits, no longer fit well for CalPERS.

That seems to be the trend.  A growing number of public pension funds in California and other states are saying “No” to hedge funds because of the high fees, risk and recent modest returns.

The attorneys of Eccleston Law Offices represent investors and advisers nationwide in securities and employment matters. Our attorneys draw on a combined experience of nearly 50 years in delivering the highest quality legal services.

Related Attorneys: James J. Eccleston


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