It's no secret that public pensions are boosting allocations to hedge funds. Many funds had already boosted allocations to private equity and now they seem bent on pushing their hedge fund allocations to similar levels.

The average hedge-fund allocation among public pensions has increased to 6.8 percent this year, according to Preqin, up from 3.6 percent in 2007. And the number of public pensions investing in hedge funds has risen 50 percent since 2007 to roughly 300 today. This trend has the hedge fund industry salivating.

The fact is that the average allocation seems kind of low, despite the growth over the past few years. New Jersey's State Investment Council, for example, recently voted to raise the state's pension fund allocation target to 10 percent from 6.7 percent, notes the WSJ. We would not be surprised if others follow suit.Pension committees have all looked into the future and came away with a tremendous appreciation for their future liabilities. They need better performance now, and a heavier emphasis on alternatives is one path.

With that said, not all funds are created equal. Pensions and their consultants have some big decisions to make, as the number of hedge funds continue to multiply. Transparency, third-party administration and strong compliance programs are essential these days if you want to stand out.

I mention this in part because we are hosting a free Webinar on June 15 on these issues. Hope you can make it. 

For more:
-here's the article