The UK's second largest pension fund, the Universities Superannuation Scheme (USS) Ltd has secured its move into hedge funds with the appointment of its first manager.

Emily Porter has been recruited as a portfolio manager for the Absolute Return Strategies programme, reporting to head of alternative assets at USS, Mike Powell. She joins from Key Asset Management, where she worked as an investment director focusing on Event Driven and Distressed hedge fund research, as well as managing Multi Strategy Fund of Hedge Fund portfolios.

"I am very pleased to announce the addition of Emily to the alternatives team at USS to help launch our hedge fund investment programme," said Powell. "Emily is the first of a number of hires we will be making in this area to build our in-house hedge fund selection capability.

"We believe that the current turmoil in the hedge fund industry represents a compelling investment opportunity for investors like USS who are able to take the long-term view. The Absolute Return Strategies programme will form a core part of our strategy for alternative assets."

Around ten per cent of the USS's fund is currently invested in alternatives, with a 20 per cent allocation target over the medium-term. Around £2bn has been invested into alternative assets since the launch of the programme in 2006, principally in private equity and infrastructure investments.

Meanwhile, the majority of hedge fund assets under management now come from institutional investors, according to the Alternative Investment Management Association (AIMA), with a third of those assets now coming from pension funds.

The international trade body for the hedge fund industry has produced research that shows the hedge fund industry plays an important role for institutions in looking after pensions and savings, said Andrew Baker, chief executive of AIMA. "Hedge funds and funds of funds are skilled at managing risk and delivering stable returns, which institutions need at this time more than ever. They offer an extension of investment capabilities to institutional investors through their skills and expertise."

Tom Kehoe, research manager of AIMA, added: "Traditionally, high net worth individuals accounted for most of the assets under management (AUM) by the hedge fund industry globally but institutional investors have been steadily increasing in significance in recent years and we think they now account for an absolute majority of AUM. Pension funds account for about a third of that, or one-sixth overall. These figures are estimates, but they are informed by all the data at our disposal," he said.

- Pensions Age March 2009

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