TODAY'S low-interest-rate environment has made the hunt for investment income tougher than ever. Many overseers of public pension funds, desperate to bolster returns and meet ballooning retiree obligations, have turned from traditional investments like stocks and bonds to hedge funds and private equity. These so-called alternative investments now account for almost one-quarter of the roughly US$2.6 trillion in public pension assets under management nationwide, up from 10 per cent in 2006, according to Cliffwater, an adviser to institutional investors. Investments in public companies' shares, by contrast, fell to 49 percent from 61 percent in the period.
Fans of alternative investments argue that...
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