NPS makes first single-manager hedge fund investment with $810 mn

  • 2020-04-03

The National Pension Service committed about 1 trillion won ($810 million) to four global hedge fund houses in 2019, in its first investment in single-manager hedge funds.

For the new mandate, it picked London-based Marshall Wace and three US fund houses – Crabel Capital Management, Pentwater Capital Management and Waterfall Asset Management – in the fourth quarter of last year, NPS said on April 2.

NPS declined to disclose the specific amount allocated to each fund house and how much of the committed capital has been called in so far.

The four hedge fund managers employ different strategies.

Crabel Capital, founded by short-term commodity trader Toby Crabel, specializes in systematic trading of managed futures and currencies, while Waterfall Asset focuses on structured credit such as asset-backed securities and loans.

Marshall Wace is a leading equity long/short investment manager. Pentwater Capital specializes in merger arbitrage and event-driven equity and credit strategies.

The NPS’ top investment decision-making body in May 2019 allowed the South Korean pension scheme to expand hedge fund portfolios into single-manager funds to chase higher returns and save investment fees.

Including the new commitment, its global hedge fund investments will double to 2 trillion won.

NPS began hedge fund investment through two funds of funds managed by BlackRock and GCM Grosvenor, to which it committed 500 billion won respectively in 2016.

NPS is allowed to allocate up to 0.5% of total assets to hedge funds, meaning that it still has room to increase hedge fund allocations by at least 1.7 trillion won to 3.7 trillion won, based on its 743 trillion won in assets under management at the end of January.

By Chang Jae Yoo

yoocool@hankyung.com

<Edited by Yeonhee Kim>