Institutional investors, led by the $202bn Texas Teacher Retirement System in Austin, are rallying support to push for the implementation of cash hurdles in hedge fund incentive fees, according to a report by Pensions & Investments.

An open letter from TRS highlighting the “misalignment” between investors and hedge fund managers has gained momentum since its initial release on 30 May. Initially supported by just over 30 signatories, the letter now boasts nearly 60 backers, as seen in an updated version obtained by Pensions & Investments.

New signatories include the $77bn Los Angeles County Employees Retirement Association, the $16.7bn New Mexico Educational Retirement Board and Canada’s TTC Pension Plan, which oversees more than $6bn. SECOR Asset Management, the Smithsonian Institution and Soros Fund Management have also joined the cause. Additionally, three more consultants —Meketa Investment Group, NEPC and Cambridge Associates— have signed on, bringing the total number of consulting firms to six.

The report quotes Joel Hinkhouse, TRS’s director of external public markets: “If you are a hedge fund and return 5.25%, you have not made us alpha. So, you should not take a carry for that. It is not tenable long-term.”

Over the past two and a half years, TRS has only hired one market-neutral hedge fund manager without a cash hurdle. The pension fund has terminated or replaced several managers to align with this policy. As a result, the proportion of market-neutral hedge funds in TRS’s portfolio with a cash hurdle has increased from 25% to nearly 40%.