Billion Dollar Hedge Fund Club Grows to $889B

The club for the top hedge fund investors has just grown its total to represent one-quarter of all capital in the asset class today.

The Billion Dollar Club, which encompasses 247 institutions that have $1 billion or more in the asset class, now stands at $889 billion. Some of its largest managers by total assets under management include Bridgewater Associates, AQR Capital Management, and London’s Man Group.

Over the past year, 42 members have left its ranks, with 47 new participants replacing them, reports research firm Preqin. The most new entrants come from private sector pension plans. A majority of new entrants are also European, while more North American affiliates are leaving as they look to de-risk their plans. Former members include the California Public Employees Retirement System (CalPERS), the New York City Employees’ Retirement System, and the Alaska Permanent Fund Corp.

One of the newer members is the London-based John Lewis Partnership Pension Trust ($8.2 billion assets under management), which raised its hedge fund allocations by two percentage points (from 16% to 18% of total assets) in 2017 to gain acceptance.

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Although the size of the group has increased from May 2017’s $802 billion cap, the mean allocations have dropped as class speculation continues due to lackluster performance and economic worries in recent years. The average member now allocates just 15% of their capital to hedge funds. In 2016 and 2017, total capital allocations were at nearly 17% and 16%, respectively.

Despite the downswing of allocations, Preqin determines that the club will be fine as investors fearing an equity downturn look to lower their positions on hedge funds. The reason? A constantly evolving market in terms of strategy and technology.

Prequin said that 2017 saw growth in “emerging sectors such as alternative risk premia as well as innovation in use of new technologies such as blockchain, artificial intelligence, and machine learning techniques,” and reported that the billion-dollar hedge club is “looking to embrace all these technologies, as the hedge fund industry enters its next stages of evolution.”

Tags: Billion Dollar Club, Hedge Funds, Preqin

Scott Evans, CIO, Deputy Comptroller for Asset Management, NYC Pension Funds

After nearly four years with the pension fund system covering New York City’s employees, its chief investment officer will be leaving his post at the end of June, CIO has learned.

Scott Evans, CIO of the New York City Pension Funds ($194 billion), asked to step down from his role on June 29, just as the five-plan pension system’s fiscal year ends, a statement from city Comptroller Scott Stringer confirmed on Monday.

Stringer’s office will conduct a national search to fill the vacancy, with Alex Doñé, deputy CIO, in charge of private markets for the Bureau of Asset Management (BAM) stepping up as interim CIO in the meantime. He will work closely with Michael Haddad, deputy CIO of the bureau’s public markets unit. Stringer expects to find Evans’ replacement by the end of the year.

Evans thanked Comptroller Stringer for “giving me this opportunity to serve my city, and for his unwavering support for sound decision-making on behalf of our hard-working pension beneficiaries” in the statement. He also expressed confidence in Doñé’s leadership abilities.

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Evans will be the third New York pension CIO to announced their departure this month, following Sean Crawford’s move from the MTA and Vicki Fuller’s retirement from the New York Common Retirement Fund ($209 billion), which covers state and local governments outside the city.

During his time with the fourth-largest US public pension system, Evans and the bureau produced a 7.4% annual return, beating the 7% actuarial assumed rate. In addition to championing diversity, increasing transparency, and rearranging the policy and structure of the five plans, Evans also restructured the bureau as well, creating deputy CIO, chief risk officer, and chief compliance officer positions.

In December, Evans received the CIO Innovation Award for best public defined benefit plan above $100 billion. Along with Crawford, he was recently a panelist at the CIO Summit earlier this month.

“Scott Evans is a consummate professional whose pension advice is sought after around the globe, and I know I speak on behalf of all our trustees when I thank him and the rest of BAM staff for their superb management of the funds these last four years,” Stringer said.

Evans was unavailable for direct comment.

Tags: CIO, New York City Pension Funds, Pension, Scott Evans