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Rhode Island slashes investments in hedge funds to boost returns
September 29, 2016 / 1:12 AM / a year ago

Rhode Island slashes investments in hedge funds to boost returns

Sept 28 (Reuters) - Rhode Island’s state pension fund on Wednesday said it will cut its investments in hedge funds by more than $500 million over the next two years as part of a new investment plan favoring more traditional strategies for better returns.

Rhode Island’s decision comes after New Jersey’s state pension fund announced in August that it would slash its hedge fund investments by half.

Under the "Back to Basics" plan, Rhode Island's pension fund will reallocate funds to more traditional asset classes, the State Investment Commission said in a statement. (bit.ly/2dbc9Pj)

A majority of investments will be put in low-fee index funds and in other assets designed to protect against market risks such as inflation and volatility.

“Our ‘Back to Basics’ approach will improve returns through common sense investments that have proven they can deliver growth and stability,” state Treasurer Seth Magaziner said in a statement.

To date in 2016, the pension fund said it has earned about $334 million in investment gains and contributions.

In March, Reuters reported that Rhode Island’s pension fund voted unanimously to exit Luxor Capital after influential industry consultant Cliffwater recommended the removal of its money from the hedge fund.

Luxor was not the only loser for Rhode Island last year. The Indus Asia Pacific Fund lost 35.8 percent and the Brigade Leveraged Capital Structures Fund fell 10.3 percent, data from the state showed.

In 2014, the California Public Employees’ Retirement System became the first prominent public pension fund to forgo its hedge fund investments after finding them too costly and complex.

Reporting by Vishal Sridhar in Bengaluru; Editing by Leslie Adler

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