- Associated Press - Sunday, January 22, 2017

TOLEDO, Ohio (AP) - The board of Ohio’s largest public pension fund has voted to remain invested in hedge funds, despite higher fees and poorer recent returns than some other types of investments.

The Blade reports (https://bit.ly/2k5hJEy ) the Ohio Public Employee Retirement System board of trustees recently voted to keep the pension benefits’ exposure to hedge funds at 8 percent of its $87 billion total fund.

The exposure for investments in the system’s separate health care fund is 6 percent. The system has $6.5 billion invested in hedge funds between both funds.

PERS chief investment officer Rick Shafer says hedge funds have returned more than 4 percent over the last five years. He says that’s below the overall investment target of about 7 percent, but better than the performance of bonds.

Steve Toth, who represents retirees on the board, opposed the allocation, saying the system is “taking all the risk.”

“The hedge fund managers have minimal risk involved, and they’re making just as much money as we’re making,” he said. “If we’re interested in volatility, there are other investment instruments that we can invest in and get the same results that we’re getting through these hedge funds.”

Shafer said the hedge funds take one-fifth of the volatility risk that the stock market takes, so lower returns should be expected.

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