Blackstone was one of the investment firms that helped CalPERS get its start in hedge funds over a decade ago. But the firm’s president, Tony James, told a crowd at a private equity event on Thursday that he supported the pension fund’s pullback from hedge funds. From Chief Investment Officer:
Speaking at a private equity event in New York yesterday, James said CalPERS’ move was “wise” given the poor returns generated by the allocation, dubbed “Absolute Return Strategies” (ARS) by the pension.
He added: “A lot of people think about hedge funds as a way to get higher returns. Hedge funds are a way to play the stock market with somewhat lower volatility and somewhat lower returns. You don’t expect hedge funds to get shoot-the-lights-out returns. You save that for private equity and for real estate.”
CalPERS hired Blackstone in 2001 to invest $1 billion in hedge funds.
Over the past 10 years, the pension fund’s hedge fund portfolio produced annualized returns of 4.8 percent, according to Bloomberg.