LONDON Dec 6 The pension fund for Transport for
London, the government body in charge of the capital's giant
transport network, is putting more of its money into hedge
TfL's fund is in the final stages of investing with hedge
funds Och-Ziff Capital Management and Arrowgrass Capital
Partners, and is set to boost its holding with Bridgewater
Associates, the world's largest hedge fund, TfL's investment
officer Padmesh Shukla told Reuters.
The move reflects a plan by TfL, responsible for London's
public trains, trams, buses, bicycle system and the London
Underground, known as "The Tube", to invest a quarter of its
cash in so-called alternative assets, including hedge funds.
In doing so, the 6 billion pound ($9.7 billion) scheme joins
the pension funds of the Church of England and particle physics
laboratory CERN by hiking its investment in the secretive world
of hedge funds.
Conservative investors such as pension funds are keen to
diversify away from traditional asset classes like stocks and
"Trustees have decided to increase the exposure to
alternatives, including hedge funds, to improve the Fund's
risk-adjusted returns," Shukla said.
TfL has chosen some of the biggest - and wealthiest - names
in the industry.
Connecticut-based Bridgewater is headed by Ray Dalio, who is
worth $10 billion, according to Forbes. Daniel Och, a former
Goldman Sachs trader and founder of Och-Ziff, has $2.3
billion in assets.
The pension fund also recently put money into Gresham
Investment Management, a commodities fund, and decided to reduce
its allocation to Guernsey-headquartered BlueCrest Capital
Management after shifting money out of its AllBlue fund and into
its International and Trend portfolios, Shukla said.
BlueCrest was founded by Michael Platt, worth 650 million
pounds, according to the Sunday Times "Rich List".
Shukla did not disclose the size of the planned allocations.
According to the fund's 2012 annual report, TfL had 12
percent of its assets invested in alternative assets - which
include hedge funds - for the year to the end of March, up from
10.1 percent a year earlier.
TfL already invests with hedge fund Davidson Kempner
Partners, the annual report shows.
The fund's biggest investment is in overseas equities, which
make up 40.4 percent of its assets. Some 16.5 percent of the
money is in UK government bonds and 15 percent in UK stocks.
TfL, created after taking over from predecessor London
Regional Transport in 2000, is controlled by a board chaired by
Mayor of London Boris Johnson.
Its pension scheme covers almost 83,000 current and former
employees. According to the most recent funding valuation, dated
31 March 2009, the scheme's assets were 1.2 billion pounds less
than the amount it expects to have to pay out.