Key Takeaways
- • Institutional Investor announced six finalist allocators competing for "Public Plan of the Year" at the 20th Annual Hedge Fund Industry Awards (May 2023), selected from hundreds of nominees and vetted by editorial staff.
- • Hawaii Employees' Retirement System led finalists with 15.72% returns in diversifying strategies including hedge funds for the fiscal year ending September 30, demonstrating hedge funds' defensive value during the 2022 bear market when stocks and bonds fell in tandem.
- • Public pension finalists span geographically and strategically diverse mandates: South Carolina's portable alpha program, Los Angeles County's equity-uncorrelated hedge fund deployment, Indiana's low-volatility outperformance, Utah's consistency through volatility, and Texas's commitment to seeding emerging managers alongside positive returns.
- • The voting structure separates allocator and manager constituencies: hedge fund managers vote for top allocators while allocators vote for manager finalists, ensuring peer-driven recognition within the industry ecosystem.
- • 2022 hedge fund allocations proved effective risk mitigation tools when traditional diversification failed, positioning hedge funds as ballast for asset owners navigating simultaneous equity-bond market declines.
Summary
The 20th Annual Hedge Fund Industry Awards will recognize six finalist allocators in the Public Plan of the Year category at an awards ceremony in May 2023, according to Institutional Investor. The finalists were selected from a pool of hundreds of nominees submitted by managers, peer institutions, and other industry professionals, then vetted by the publication's editorial team. Six candidates now advance to a final voting round, with hedge fund managers invited to cast ballots for their preferred allocators.
The finalist slate reflects public pension systems of varying sizes and strategic approaches to hedge fund deployment. The Employees' Retirement System of the State of Hawaii stands out for delivering 15.72% returns across its diversifying strategies allocation—including hedge funds—for the fiscal year ending September 30. This performance underscores a broader market narrative: during 2022's pronounced bear market, when equities and fixed income declined simultaneously, hedge fund allocations functioned as defensive ballast, allowing some asset owners to avoid losses and achieve positive annual returns when traditional diversification proved ineffective.
The remaining finalists highlight distinct hedge fund utilization strategies. The Retirement System Investment Commission of South Carolina operates a significant portable alpha program, while the Los Angeles County Employees Retirement Association uses hedge funds explicitly to mitigate risk and generate returns uncorrelated to equity markets. The Indiana Public Retirement System has built a low-volatility hedge fund portfolio that has consistently outperformed its benchmark. The Utah Retirement System demonstrates steadiness in its hedge fund program despite sustained market volatility over recent years. The Employees Retirement System of Texas has combined positive hedge fund performance with an explicit commitment to seeding new managers—a strategic stance reflecting confidence in emerging talent within the hedge fund space.
The voting structure reinforces peer-based recognition: allocators are asked to vote for manager finalists while hedge fund managers determine the top allocator winner. This bifurcated approach ensures that recognition reflects genuine industry assessment rather than administrative determination alone. The finalist mix—spanning geographic regions and risk-management philosophies—illustrates the diversified role hedge funds play within institutional pension portfolios in 2023, particularly as asset owners recalibrate positioning after 2022's simultaneous multi-asset decline.
The finalist slate reflects public pension systems of varying sizes and strategic approaches to hedge fund deployment. The Employees' Retirement System of the State of Hawaii stands out for delivering 15.72% returns across its diversifying strategies allocation—including hedge funds—for the fiscal year ending September 30. This performance underscores a broader market narrative: during 2022's pronounced bear market, when equities and fixed income declined simultaneously, hedge fund allocations functioned as defensive ballast, allowing some asset owners to avoid losses and achieve positive annual returns when traditional diversification proved ineffective.
The remaining finalists highlight distinct hedge fund utilization strategies. The Retirement System Investment Commission of South Carolina operates a significant portable alpha program, while the Los Angeles County Employees Retirement Association uses hedge funds explicitly to mitigate risk and generate returns uncorrelated to equity markets. The Indiana Public Retirement System has built a low-volatility hedge fund portfolio that has consistently outperformed its benchmark. The Utah Retirement System demonstrates steadiness in its hedge fund program despite sustained market volatility over recent years. The Employees Retirement System of Texas has combined positive hedge fund performance with an explicit commitment to seeding new managers—a strategic stance reflecting confidence in emerging talent within the hedge fund space.
The voting structure reinforces peer-based recognition: allocators are asked to vote for manager finalists while hedge fund managers determine the top allocator winner. This bifurcated approach ensures that recognition reflects genuine industry assessment rather than administrative determination alone. The finalist mix—spanning geographic regions and risk-management philosophies—illustrates the diversified role hedge funds play within institutional pension portfolios in 2023, particularly as asset owners recalibrate positioning after 2022's simultaneous multi-asset decline.
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