30/06/2010 Author: Shannon Hawthorne

Avon pension reviews AIFM Directive risks

The $3.44bn Avon Pension Fund is to assess the potential impact of the draft Alternative Investment Fund Managers (AIFM) Directive as part of a major review of its hedge fund portfolio.

The fund’s current investment portfolio, which has been allocating to the space since 2007, currently allocates 10% of its overall portfolio to five funds of hedge funds (FoHFs): Stenham Universal, Lyster Watson, Signet Global, Gottex and Man Group.

“We are due to review our FoHF investments and so naturally we wanted to incorporate any regulatory change into that review,” Matt Betts, assistant investments manager told HFMWeek.

A number of high-profile pension funds have expressed fears that the increased compliance costs brought about by the Directive are likely to be passed onto investors.

The move also follows concerns raised at a previous meeting about whether the Avon fund should, in fact, be investing in hedge funds at all.

According to the meeting minutes, one member of the pension fund panel argued that hedge funds “bore a major share of the responsibility for the financial crisis” and have “in effect, gambled with borrowed money.”

It was subsequently decided that the fund’s investment into the hedge fund space would be reassessed as part of the upcoming strategic investment review, which is due to be completed early next year