An inside look at hedge fund deliberations
Mar 18th, 2008 | Filed under: Institutional Investing
Pensions & Investments reports that the $14 billion Montana Board of Investments is considering its maiden hedge fund investment. Fund managers Blackrock and Grosvenor gave what were referred to as “educational presentations” in mid-February. If you’ve ever wondering what is said during these deliberations over hedge funds, you’ll find the minutes (released last week) from that meeting interesting.
Tom McGillvray, the Montana Legislature’s representative on the board wins the coveted AllAboutAlpha award for Montana House Member of the Year and shows that we may have been wrong in our assumption that politicians are scared of idiosyncractic risk (see related posting). According to the minutes, McGillvray asked the question that is often ignored amonst the media-driven hype surrounding hedge funds:
“Representative McGillvray commented that the biggest criticism of the Board of Investments from the legislators is where the S&P and Nasdaq stocks in general just went down 2,000 points. If the Board had had a position in a fund of funds hedge fund, which did not have that same reaction in that market environment, the performance would have been incredibly better. These types of alternative investments do have merit, and board has real opportunity to look at these. Yes, the fee may be more expensive but you must also look at what you get for that fee.”
Here is how official scribes reported the rest of the deliberations (we’ve added each board member’s day job as background):
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