US public pension plans with long-standing allocations to hedge fund strategies, including the Virginia Retirement System and the Texas County and District Retirement System, have reported strong gains as of June amid renewed interest in the asset class from institutional investors, according to a report by Alternatives Watch.
PineBridge Investments and Capula Investment Management have seen renewed commitments from institutional allocators, who are increasingly incorporating hedge funds into the more liquid segments of their alternative investment programmes.
VRS, which has assets totalling $114bn, recently committed $200m to PineBridge under its $3.9bn dynamic strategies programme, which includes hedge funds, and recorded a 9.7% gain for the fiscal year of 2024.
Earlier this year, VRS introduced asset allocation leverage amounting to 1% of its total fund, with the potential to scale up to 3%. Other institutional investors are also using leverage to diversify further into private markets and away from traditional assets.
The Texas County and District Retirement System in Austin, meanwhile, reported a 14% gain in its $2.5bn hedge fund program for the year ending 30 June. Although the pension fund has not made new hedge fund commitments in recent years, past investments include firms like Chatham Asset Management, Putnam Blue Scale, CQS, Senator Global, Lakewood Capital Partners and KLS.
