Transport for London’s pension fund is increasing its allocation to hedge funds, as the fund has planned to invest a quarter of its cash in alternatives.

Speaking to Reuters, the scheme’s investment officer Padmesh Shukla said the pension fund will be investing with hedge funds Och-Ziff Capital Management and Arrowgrass Capital Partners, and will increase its holding with Bridgewater Associates. He said exposure to alternatives will be increased to improve the fund’s risk-adjusted returns, but he did not disclose the size of the planned allocations.

The TfL pension fund had 12 per cent of its portfolio in alternative assets, including hedge funds, for the year up to 31 March 2012, up from 10.1 per cent a year earlier, its 2012 annual report showed. Global equities make up 40.4 per cent of its portfolio, while 16.5 per cent is in UK government bonds and 15 per cent in UK equities.

The scheme has 83,000 members and a deficit of £1.2bn at its latest valuation on 31 March 2009.

Share Story: