By Anastasia Donde
At a time when many investors have been spooked by a high-profile Ponzi scheme, poor performance and the shakeout among hedge funds, the Philadelphia Public Employees Retirement System hasn't retreated from hedge funds. Instead, it has been trying to gain more control over its investments by increasing its exposure to single-manager hedge funds instead of going the fund-of-funds route.
Philadelphia's $3.5 billion pension fund is now close to investing half of its 6% hedge fund allocation directly into hedge funds. And the managers that have been funded so far are already delivering strong returns and outpacing Philadelphia's funds of funds. The fund is up 11.87% year-to-date as of August 31.
Philadelphia decided to move into direct investing two years ago, chief investment officer Chris McDonough (right) says, to save on fees, have more control over its exposures and get access to better funds.
"Some [hedge...