U.S. GAO Warns Pensions About Alternatives
Oversight and due diligence tough for smaller plans.
BY Caroline Cakebread | September 9, 2011
A new study by the U.S. Government Accountability Office (GAO) is now warning pension plans about the risks and challenges involved in hedge fund and private equity investments. The government agency says many pension funds are having a hard time dealing with them even though these risks are understood by many who work in the alternatives industry. The GAO says in its report: “According to plan officials, regulators, and others, some pension plans — especially smaller plans — may find it particularly difficult to address the various demands of hedge fund investing.” The GAO cites issues with medium-size and smaller plans which might lack the expertise to oversee the trading and investment practices of hedge funds, while some plans may be unable to conduct the necessary due diligence and monitoring of hedge fund investments. Read the full article in Institutional Investor.