With a proven history of delivering positive returns under varying market conditions, hedge funds have increasingly become a favored investment choice for public and private pension funds, endowments, non-profit organizations, and other institutions seeking diversified portfolios and reliable returns to meet their financial obligations.
While the S&P 500 has made steady gains over the past three years, hedge funds still outperform the index over a five year annualized time period, which includes the financial crisis. As of December 2012, hedge funds’ annualized return from 2007-2012 was over 6%, while the annualized return for the S&P 500 during that same time period was negative.1
Institutional investors, like foundations, educational institutions and pensions, have come to rely on hedge funds as a nimble investment tool aimed at mitigating risk to protect and grow their assets.
Foundations, with investments in hedge funds, support communities in the U.S. and around the world through improvements in education, health and economic issues as well as an emphasis on arts and cultural development.
Creating Educational Opportunities through Endowments
For many educational institutions, hedge funds are an important tool used to diversify their portfolios, manage risk and produce reliable returns. Hedge fund investments help these institutions fund scholarships, financial aid, research, athletics and other programs.
Building Retirement Security through Pension Plans
Many public and private pension plans, which rely on hedge funds to provide diversify their portfolios, manage risk and produce reliable returns, provide retirement security to millions of families in America and around the world.5As of February 2013, the 200 largest U.S. retirement funds utilize hedge funds at a growing rate, with their investments totaling $134.7 billion6, including:
1Preqin Ltd., February 2013
2Preqin Ltd., October 2012
3Preqin Ltd., February 2012
4Robert Wood Johnson Foundation
5SEI/Greenwich Associates, 2009; Infovest21, 2010
6Pensions & Investments, February 2013
8Robert Wood Johnson Foundation
9 Reuters, “NY City police pension fund OKs hedge fund stake.” 3/2/2011