Kentucky Pension CIO: Hedge Fund Costs Spurring Pullout

David Peden, CIO of Kentucky Retirement Systems, discusses the decision to withdraw from certain hedge fund strategies due to high fees and overlapping with traditional investments. The focus is on creating a less complex, lower-cost, and more transparent portfolio. Public perception and the need for taxpayer confidence are also considered.

What prompted Kentucky Retirement Systems to reconsider their hedge fund investments?

• High returns and low fees

• Public perception and high fees

• Pressure from other investors

• Lack of diversification

What was the performance target for the hedge fund portfolio over the past five years?

• Libor plus 3 to 500 return

• Libor plus 2 to 400 return

• Libor plus 1 to 300 return

• Libor plus 4 to 600 return

Which strategies are being reconsidered due to their overlap with traditional portfolios?

• Global macro and trend followers

• Fixed income ARB and risk ARB

• Long-short equity and event-driven

• Relative value strategies

Why are certain strategies like global macro being retained?

• They are popular with investors

• They have high returns

• They offer diversification benefits

• They are low cost

What is a significant challenge in managing public perception of hedge funds?

• Ignoring public concerns

• Educating the public about their benefits

• Increasing the number of hedge funds

• Reducing the number of hedge funds

What is the public's general perception of hedge fund managers?

• They are perceived as wealthy individuals with lavish lifestyles

• They are viewed as responsible investors

• They are seen as philanthropists

• They are considered to be underpaid

What is the main reason for the public's concern about hedge funds?

• Their transparency

• Their high returns

• Their complex strategies

• Their high fees and perceived opulence