Despite the headlines, US public pensions not losing any sleep over their alternative investment allocations
| Aug 25th, 2010 | Filed under: Institutional Investing, Today's Post | By: Guest |
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By: Steve Deutsch, Morningstar & AllAboutAlpha.com Editorial Board
Financial Times columnist Tony Jackson wrote earlier this week that General Motors is essentially a giant hedge fund attached to a car company. Why? Because, he reports, 65% of the GM pension fund “is spread across real estate, equities, hedge funds, private equity and so forth.”
In general, this made me wonder how defined benefit pension plans, those long-term, patient sources of capital, are now using alternative investments and whether their outlook has changed because of the subprime credit crisis of 2008-2009. This is an interesting question because of the headline risk that investing in alternatives brings to public plans and their constituents: pensioners, trustees and – as we see in the case of GM – taxpayers.
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