Major pension scheme sticks by hedge fund move

LONDON (Reuters) - The nation’s second-largest pension fund, the Universities Superannuation Scheme (USS), said it was sticking by a medium-term plan to double exposure to alternative assets such as hedge funds and private equity.

The 23 billion pound pension scheme confirmed the target as it announced its first appointment to a new hedge funds team on Monday.

USS currently has 10 percent exposure to alternatives, making it already one of the more adventurous UK pension funds.

Its plan to increase that to 20 percent, coupled with specific move to boost hedge fund investment, will be comfort to an industry which struggled with poor performance and heavy outflows during a turbulent 2008.

“We believe that the current turmoil in the hedge fund industry represents a compelling investment opportunity for investors like USS who are able to take the long-term view,” said USS’s head of alternative assets Michael Powell.

There have been fears that conservative long-term investors such as pension schemes could be put off future allocations to hedge funds.

USS said on Monday that Emily Porter, previously an investment director at Key Asset Management, has joined as a portfolio manager for USS’s Absolute Return Strategies programme. She is the first of a number of hires USS plans to make as it builds its internal hedge fund investment skills.

About a quarter of USS’s allocation to alternatives will be made by the Absolute Return Strategies programme. Until now, much of USS’s alternatives exposure has come in private equity and infrastructure investment.

USS acts for 378 universities and academic institutions and has about 250,000 members.

Reporting by Joel Dimmock; Editing by Rupert Winchester