US pension funds see significant hedge fund gains

US public pension plans with established investments in hedge fund strategies, such as the Virginia Retirement System and the Texas County and District Retirement System, have posted robust gains as of June, reflecting growing institutional interest in this asset class, according to a new report. Institutional investors have been increasingly directing funds toward hedge funds, particularly within the more liquid components of their alternative investment programs. PineBridge Investments and Capula Investment Management are among the firms benefiting from this renewed commitment.

VRS, which manages $114 billion in assets, recently allocated $200 million to PineBridge as part of its $3.9 billion dynamic strategies program, which includes hedge funds. For the fiscal year 2024, VRS reported a 9.7% return. Earlier this year, VRS introduced a leverage strategy that accounts for 1% of its total fund, with the possibility of increasing it to 3%. This move is part of a broader trend among institutional investors using leverage to further diversify into private markets and away from traditional assets.

Meanwhile, the Texas County and District Retirement System, based in Austin, recorded a 14% gain in its $2.5 billion hedge fund program for the year ending June 30. Although TCDRS has not made new hedge fund commitments in recent years, its past investments include firms such as Chatham Asset Management, Putnam Blue Scale, CQS, Senator Global, Lakewood Capital Partners, and KLS.