Number: RS22679
Title: Pension Funds Investing in Hedge Funds
Authors: William Klunk, Domestic Social Policy Division 
Abstract: The proportion of U.S. corporate-defined benefit pension funds investing in hedge funds has increased to 24% in 2006, up from 19% in 2004 and 12% in 2000. Although statistics vary, total corporate pension fund assets allocated to hedge funds in 2006 was 2.1%. Because of hedge funds' risky nature, rapid growth, lack of oversight, and recent losses, some wonder if they are appropriate investments for workers' retirement funds. In 2004, the Securities and Exchange Commission (SEC) issued a rule requiring many hedge fund advisers to register as investment advisers under the Investment Advisers Act. The rule took effect in February 2006, but in June 2006 a court challenge was upheld, and the rule was vacated. In early 2007, while the Bush Administration called for increased vigilance rather than new government rules to handle industry risks, Congress has asked the Government Accountability Office to examine the use of hedge funds by public and private sponsors of defined benefit pension plans.
Pages: 6
Date: June 15, 2007