The Dorset County Pension Fund (DCPF) has $2.23 billion in investments, 2% of which were tied up with Pioneer Alternative Investments, a Madoff-tainted hedge fund. It is now reallocating that money into International Asset Management (IAM), a long-established European fund of hedge funds (FoHF).
The pension fund is doubling the $25.6 million investment it has with IAM, according to Nick Buckland, investment officer at Dorset County Council.
It was only last year that DCPF had investments with three FoHFs, IAM, Gottex Fund Management and Pioneer Alternative Investments, which each managed a portion of the pension fund’s hedge fund allocation.
“We decided to redeem from Pioneer last year due to the hedge fund’s exposure to Bernard Madoff,” stated Buckland, adding that the fund was now planning to re-invest the redeemed assets. “We are very happy with our remaining two managers, and all the redeemed assets from Pioneer are being reinvested with IAM,” he said.
However, it has taken over a year for the pension fund to receive the assets back from Pioneer, which had 10% of its assets entangled with the Madoff fraud, and the pension has not yet received its entire investment back.
Dorset County has a 6% target allocation to hedge funds, and currently has 5.5% invested. Buckland confirmed that the pension fund is unlikely to increase that target in the foreseeable future and is unable to make direct investments, as the council doesn’t have the resources to do so. “For now, FoHFs work for us,” he said.