UN Pension Weighs First Foray Into Hedge Funds

The United Nations Joint Staff Pension Fund is in the process of upping its allocation to alternative investments, and the pension fund has asked its consultant to study possible hedge fund investments.

The UN pension fund has never invested in hedge funds before. From CNBC:

The U.N. is considering investing directly in external money managers or using a broader fund of hedge fund structure—or both—according to a person familiar with the situation. Either way, the pension staff views hedge funds as an important portfolio diversification tool that would add to current alternative investments in private equity funds and a non-hedge fund vehicle managed by Ray Dalio’s Bridgewater Associates.

Buck Consultants, an external advisor to the pension plan, is set to complete a study as early as this summer that will recommend the best approach to investing in hedge funds for the first time, including in what amount, according to the person.

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The U.N. fund averaged a return of 6.18 percent from 2004 to 2014, according to U.N. materials. That outperformed its policy benchmark return of 5.84 percent (a mix of 60 percent stocks and 31 percent bonds), but was behind global stocks (6.6 percent).

The UN fund has a target alternative allocation of 6 percent, but its actual alternatives allocation stands at 3 percent.

The fund manages over $50 billion in pension assets.