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Administration January 26, 2007
IL Teachers' Retirement System to Enter Hedge Fund Arena
January 26, 2007 (PLANSPONSOR.com) - The Illinois
Teachers' Retirement System plans to throw some of its assets
into hedge funds as part of its investment strategy shuffle
meant to boost returns and dig the system out of a funding
shortfall, according to the Chicago Tribune.
Reported by Adrien Martin
According to the newspaper, the Teachers’ Retirement System has not picked its hedge fund managers, but has already said it would invest in hedge funds over one to three years and limit its exposure to 2.5%.
The Tribune reports that the teachers’ system is 62% funded and was forced to liquidate $1.2 billion in assets last year to pay benefits rather than reinvesting the proceeds.
The system, still mired in a kickback scandal involving
one of its former trustees (See
Former Illinois TRS Trustee Pleads Guilty
to Kickback Charges
– decided to enter the hedge fund arena in December.
At the same time, the system decided to decrease its
exposure to U.S. stocks and boost its investment in foreign
stocks and bonds.
Even if hedge fund investments prove lucrative, making up
the shortfall of the system will be difficult, as the
Illinois pension system was ranked the most underfunded
system in the U.S. (See
NASRA: Public Systems Funding Ratio Drops
in 2005
).
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