Abstract

Large pensions have done quite well by adding alternative investments to equity and fixed income; big public pension funds with a total market value greater than $5 billion did well using alternative investments. Figure 6.1 is a performance chart of alternative investments (real estate, hedge funds, and private equity), equity, and fixed income, with annualized returns over ten years ended December 31, 2012. Over the past decade, the “Smart Money” increased returns with alternative investments. Pension plans continue to find merit with alternative investments and have increased allocations. Table 6.1 shows the top 200 pension plans in 2011 and how much they increased their exposure to alternative investments.

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