Berkshire County Council has made the decision to invest in hedge funds as part of a 17.5% allocation to alternative investments for assets.

The Council’s £1.05 pension fund has decided to allocate 7.5% to hedge funds alone, and halved listed equities in an attempt to generate more stable returns and diversify its portfolio.

The move into hedge funds is further proof that domestic pension funds are looking to ‘alternative asset classes’ despite not offering a lot of protection from the economic downturn that we are all witnessing (and recording a 19% loss in 2008).

The move has been echoed by West Midlands Pension Scheme which moved 8% of assets into different schemes including hedge funds.

The Berkshire Council Pension Fund looks after the company pension assets of local government employees in the Borough of Windsor and Maidenhead and is looking to Morgan Stanley and Neuberger Berman to run the commodities portfolios.

The listed equities have cut their exposure from 65% to 22.5%, with the overall goal being to reduce all risk to equity. This means that the scheme will not be entirely dependent on the returns from one particular asset investment, but will give the fund exposure to a diverse portfolio and encourage it to grow.