Empire State Fund Puts $250M into Emerging Markets Hedge Fund

January 19, 2010 (PLANSPONSOR.com) – The New York State Common Retirement Fund (NYSCRF) has seeded a new feeder hedge fund with $250 million in what officials of the hedge fund say is a sign of growing institutional investor interest in their offerings. 

A Reuters news report said the NYSCRF took the $250-million position in Finisterre’s Emerging Markets Fund, which acts as a feeder fund for Finisterre’s three existing hedge funds. The Emerging Markets Fund was launched January 1, 2010.

The Empire State money will be locked up for two years, but the pension fund will be able to shift assets between the three funds as part of a reweighting process every quarter, according to Reuters.

Finisterre Chief Investment Officer Paul Crean told Reuters that the deal with the New York pension program is an example of heightened institutional interest from money managers searching for heightened returns despite hedge fund industry losses in 2008 of around 19%.  “There’s been increasing interest from institutional investors … and they’re obviously larger tickets,” Crean said, according to Reuters.

Crean echoed the sentiment in a Finisterre news release about the NYSCRF investment. “The purpose of developing the Finisterre Emerging Markets Fund is to enable institutional investors to express their growing interest in emerging markets in a variety of asset classes,” he said in the announcement.

Reuters said the NYSCRF will initially invest 25% of its assets in Finisterre’s Sovereign Debt fund and 75% in its flagship Global Opportunity fund, until NYSCRF completes due diligence on the Special Situations fund. The New York fund is then expected to put 25% each in Sovereign Debt and Special Situations, which rose 51% and 45% respectively in 2009, with the remaining 50% in Global Opportunity

Finisterre’s assets under management were $920 million at the beginning of 2010.