In the final morning session chaired by Al Samper (pictured), former chairman of the Virginia Retirement Scheme, the issue of why hedge funds and their fees was still a hot topic amongst investors. The panel was composed of Jim Dunn, CIO of Wake Forest University, Niels Oostenbrug, Director, Alternative Investment Programme, MN Services, Anthony O’Toole, EVP and CIO of American Legacy Foundation, Greg Haenni, CIO of CERN Pension Fund and Bridget Uku, Group Investments Manager, UK LGPS Pension Fund.
Responding to why only a third of public sector firms in the UK invest in hedge funds, Uku said there were a number of contributing factors. Firstly, unfamiliarity; secondly, the fact that some of those who have invested in managers simply haven’t enjoyed the returns, and thirdly the issue of fees.
“Fees are high and there’s still a perception that hedge funds are risky. Public sector companies are under so much scrutiny that investing in the wrong manager would create a huge backlash,” said Uku.
Samper said he was amazed that trustees constantly look at the fee component. “I don’t mind paying for performance,” said Samper. “You not going to gain a lot by not paying for talented managers. Fees seem to be the flavour of the month: everyone is asking for them.”