Attracting pension plan assets: What alternative investment managers need to know (PricewaterhouseCoopers)

February 2012

KEYWORDS: pensions, due diligence, Institutional Investors, Preqin, Liquidity, valuation, Hedge Fund Regulation, counterparty risk

Authors:

Barry Benjamin, Mark Casella, Gary Meltzer, Paula Smith

Organizations:
  • PricewaterhouseCoopers

Summary:

Retirement plan sponsors are giving alternative investments, including hedge funds and private equity funds, a closer look — due to the lower historical volatility, higher returns and varied correlations offered when compared to traditional investments. In addition to performance, plan sponsors are also seeking increased levels of information on their operational complexities in order to address the total risk (investment and operational) funds pose to pension assets. Alternative investment managers must recognize the holistic nature of additional information data requests in order to promptly and effectively satisfy the increased transparency requirements of institutional investors.

The growing popularity of hedge funds, private equity funds and other alternative investments among pension plan sponsors makes this an opportune time for the managers of these funds to ramp up their marketing efforts to this key investor base. Addressing the key investor concerns, providing relevance on the mitigation of investment as well as operational risk factors can help investment managers make the most of this opportunity.

This paper offers insight on increasing institutional investor trust and ultimately satisfying as well as attracting plan sponsors.

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