Rosemary Burfoot, group accountant at the council, says the pension scheme is concerned about the effects on returns of the substantial inflows into hedge funds over the past few years. It wants to evaluate whether hedge funds will be able to continue to take advantage of short-term trading opportunities as their numbers grow.
She says she is also worried about transparency and the high levels of charges. “We will need transparency to improve and a reduction in fees before we allocate to hedge funds. But we are keeping a watching brief on funds of hedge funds.”
West Sussex has, however, decided to “dip its toe” into the private equity market to enhance returns. It has allocated £40m to private equity but has so far only invested £4m through Pantheon.
She said: “We have decided to invest a little bit in private equity to see how it performs.”
From July, it also reduced its weighting to UK equities by 2 per cent to enable an increase in exposure to emerging markets equities from 1 per cent to 3 per cent.
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