How a Retirement Fund CIO Uses Hedge Funds

The video discusses the role of hedge funds in a portfolio, emphasizing their use for diversification rather than outperforming equities. It highlights the challenges of managing a large portfolio and the need to rationalize hedge fund investments by negotiating fees and ensuring they meet return targets. The video also explores the active vs passive management debate, noting that while most large-cap equities are passively managed, there are opportunities for active management, especially outside the US.

What is the primary role of hedge funds in a portfolio according to the video?

• To focus on small-cap investments

• To minimize fees

• To provide diversification against equities

• To outperform equities

What is one of the main challenges in managing a large hedge fund portfolio?

• Finding hedge funds with no fees

• Accessing smaller, successful hedge funds

• Avoiding all hedge fund investments

• Investing only in local hedge funds

In which market is active management more prevalent according to the video?

• International markets

• US small-cap equities

• Emerging markets

• US large-cap equities

What percentage of the equity portfolio is managed passively?

• 50%

• 70%

• 100%

• 85%

Why is it important to retain certain active managers in the portfolio?

• They charge lower fees

• They focus on passive strategies

• They have generated significant alpha over the years

• They only invest in US markets