(September 17, 2020) At its monthly board of trustees meeting this week, OPERS staff and external investment consultant, NEPC, presented their plans to unwind OPERS from their hedge fund investments in the coming months. This information was presented in the context of the Hedge Fund Benchmark Allocation Change presentation made by Craig Svendsen of NEPC and Paul Greff, OPERS Chief Investment Officer.
While it has been known for some time that OPERS’ desire was to exit hedge funds, this presentation outlined the pathway to achieve that goal in steps that will free OPERS of such investments by the end of 2020. According to Svendsen in a memo directed to OPERS Board, “The hedge fund allocation in both the DB (Defined Benefit) and HC 115 (Health Care) Funds is being eliminated as quickly as manager liquidity will permit. While there are expected to be dollars not yet returned by managers into 2021, on a percentage basis, it is expected that both Funds will have a 0% target allocation to Hedge Funds by the end of 2020.”
PERI has suggested for many years that OPERS exit hedge funds that are a part of their investment portfolios. We are pleased that OPERS has made this decision as hedge funds in general have excessively high management fees that in many cases take 48 cents of every dollar of profit these funds generate. OPERS will be redirecting their hedge fund assets to stocks and treasuries.