Pension Funds Investing in Hedge Funds (CRS Report for Congress)
| Release Date |
June 15, 2007 |
| Report Number |
RS22679 |
| Report Type |
Report |
| Authors |
William Klunk, Domestic Social Policy Division |
| Source Agency |
Congressional Research Service |
Summary:
The proportion of U.S. corporate-defined benefit pension funds investing in hedgefunds has increased to 24% in 2006, up from 19% in 2004 and 12% in 2000. Althoughstatistics vary, total corporate pension fund assets allocated to hedge funds in 2006 was2.1%. Because of hedge funds' risky nature, rapid growth, lack of oversight, and recentlosses, some wonder if they are appropriate investments for workers' retirement funds.In 2004, the Securities and Exchange Commission (SEC) issued a rule requiring manyhedge fund advisers to register as investment advisers under the Investment AdvisersAct. The rule took effect in February 2006, but in June 2006 a court challenge wasupheld, and the rule was vacated. In early 2007, while the Bush Administration calledfor increased vigilance rather than new government rules to handle industry risks,Congress has asked the Government Accountability Office to examine the use of hedgefunds by public and private sponsors of defined benefit pension plans.
