New Mexico pension fund considers exiting hedge funds
New Mexico's Public Employees Retirement Association (PERA) is considering eliminating its hedge fund allocation as part of a broader review of its investment strategy, according to a report by Pensions & Investments. The potential move would represent a significant shift for the pension fund, which has historically maintained a 6% target allocation to absolute return strategies to provide…
The Public Employees Retirement Association (PERA) of New Mexico is contemplating the elimination of its hedge fund investments as part of a comprehensive evaluation of its investment approach, according to a report by Pensions & Investments. This potential change would mark a significant departure for the pension fund, which traditionally maintains a 6% allocation to absolute return strategies in order to enhance portfolio diversification.
The review stems from several alterations to PERA's investment portfolio, such as a reported $100 million withdrawal from Two Sigma Investments in September, sparked by concerns over governance and organizational instability. PERA has also reportedly divested $100 million from Rockwood Capital's multifamily real estate fund as it reevaluates its broader exposure to alternative investments.
The proposed exit from hedge funds coincides with increasing scrutiny from institutional investors regarding the role of these funds in portfolio diversification and risk-adjusted returns. However, PERA has not yet reached a final decision on the matter, nor has it disclosed how any capital withdrawn from hedge funds might be reinvested.
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