One of Europe's largest institutional investors has pulled out of funds of hedge funds, removing more than $500 million (EUR383 million) from the troubled sector, saying it doubts their utility and dislikes their lack of transparency.The EUR11.8 billion ($15.4 billion) Rabobank Pensioenfonds, one of the 100 largest pension schemes in Europe, decided to pull out of funds of hedge funds and put the money into equities, according to its annual report, published last week.
The scheme's reports show its disaffection with funds of hedge funds began in 2008. The average performance of the five funds of hedge funds it invested in - whose names it did not disclose - was a loss of 12.5%. The report said: "This is better than the return of a large number of other asset classes, but unfortunately there is no absolute positive return. This is disappointing, since hedge funds generally were considered able to give a positive return regardless of market conditions." The scheme decided early last year to stop adding to its investment in funds of hedge funds, which at the start of the year were valued at EUR384 million. It then decided to eliminate its holding.
The report said the scheme "had doubts about the added value of this asset class, and its use in diversification, and the lack of transparency of the hedge fund industry in general."
For more: Financial News: European Pension Scheme Exits Hedge Funds - WSJ.com
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