MFA Blog

Better Pension Performance Correlated with Allocation to Alternatives

Posted on August 1, 2013

Cliffwater recently found that better performing state pensions generally had higher allocations to alternatives, according to a recent article from Infovest21. The article states that the top performing state pension over the past 10 years had the highest allocation to alternatives. Incidentally, state pensions, as a whole, added 3% to their alternatives allocations in 2012.

Larger endowments outperform state pensions, possibly due to the higher allocation towards hedge funds and better access to managers—endowments allocate 34% of their alternative assets to hedge funds compared to state pensions, which allocate 17% of their alternatives.

Infovest21 notes that hedge fund allocations are the most rapidly growing alternative sector. For more information on hedge funds and state pensions, visit Infovest21 here.