Seeking Allocation Target, Florida Pension Ups Hedge Funds

(June 15, 2011) — Amid aims to meet its 6% target to hedge funds, the Florida Retirement System has hired two hedge funds and is seeking to hire others.

According to HFMWeek, the Florida State Board of Administration (SBA) awarded $100 million each to King Street Capital Management and Taconic Capital Advisors. Meanwhile, the administration, which overseas the state’s $131.5 billion pension fund, approved two additional hedge fund investments. Earlier this year, the board allocated $100 million to Mason Capital and $150 million to Highline Capital Partners, a long/short equity fund.

Also this week, the investment staff of the San Diego County Employees Retirement Association (SDCERA), which manages around $8 billion in assets, has recommended a new $50 million allocation to metals-trading hedge fund Red Kite. The allocation would be based within the fund’s real assets portfolio. Currently, the board has a 10% target allocation to the asset class, HFMWeek reported.

Recent data from Chicago-based Hedge Fund Research has pointed to the strength of hedge funds, with emerging hedge fund assets having risen to $121 billion in the first quarter of 2011, surpassing the previous record level of $117 billion set in 2007. The industry tracker noted that hedge fund assets in emerging markets have reached the new record level in the first quarter of 2011 as global investors increased exposure to emerging Asia and Russia.

“The record level of assets invested in emerging market hedge funds represents the latest evidence that global investors continue to exhibit a preference for accessing specialized emerging markets exposure via hedge funds,” said Kenneth J. Heinz, President of HFR. “As a direct result of the strategic specialization, sophistication and improved structure of emerging market hedge funds, the number of funds located in Brazil, China, Russia, Singapore and UAE all continue to grow, and we expect this trend to continue in 2011 and in coming years.”

Greater flow of institutional money and efforts to increase transparency and accessibility have also helped boost the hedge fund industry to its all-time high in assets under management. As firms continue to seek diverse and higher performing investment opportunities, Neel Mehta, a consultant on Towers Watson’s hedge fund research team, told aiCIO that he has witnessed a significantly greater number of new hedge fund launches this year compared to ever before. “I think people are seeing this wave of money coming to hedge funds, and others are following,” he noted.