16/03/2011 Author: Shannon Hawthorne

Dorset pension fund extends FoHF spend

The £1.5bn ($2.43bn) Dorset Pension Fund has allocated an additional £15m ($24.3m) to its two existing fund of hedge funds (FoHF) managers, International Asset Management (IAM) and Gottex Fund Management, bringing it back to its 6% target allocation level, HFMWeek has learned.

IAM received an additional £10m ($16.2m), while Gottex Fund Management received an additional $5m ($8.1m), Nick Buckland, the fund’s investment officer confirmed to HFMWeek. The pension now allocates £90m ($145.5m), or 6%, of its overall investment portfolio to the two funds, which now account for 4% and 2%, respectively, of the fund’s total investment portfolio.

According to Buckland, the new allocations, which were funded from Dorset’s cash allocation, were made after, “the fund’s allocation to FoHFs [fell] below the 6% target level due to other asset classes performing well”.

Dorset has been investing in FoHFs since 2004, and originally split a 6% allocation equally between IAM, Gottex and Pioneer Alternative Investments.

It redeemed from the latter in 2009 due to the fund’s exposure to Madoff, and reinvested the funds into IAM, effectively doubling its allocation – however, Buckland confirmed that there is, “a small amount still outstanding with Pioneer, which, when redeemed, will be re-invested with IAM”.