The Kentucky Retirement Systems, which allocates 10 percent of its assets to hedge funds, said this week it plans to pull $800 million out of the investment vehicles.
That number represents about half of its total, $1.6 billion commitment to hedge funds.
New board members, appointed last year by Gov. Matt Bevin, are the ones making the push.
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The investment committee Wednesday drew up a plan to pull $600 million from hedge funds by July and the remaining $200 million by July 2019. The proposal must still be approved by the full board, which meets Dec. 1.
Mr. Eager said the investment committee hasn’t decided yet where those funds will be reinvested.
Kentucky Retirement Systems’s hedge-fund investments have trailed stocks and bonds on a five-year basis, according to fund documents. Pension dollars invested in hedge funds produced a five-year return of 3.93%, compared with 5.14% for equities and 4.74% for fixed income.
The investment committee that is pursuing a hedge-fund retreat is made up of officials new to the KRS board. All five voting members of the investment committee were appointed by Gov. Matt Bevin, who made shoring up the fund a key platform of his gubernatorial campaign last year.