Pension funds have steadily been increasing their allocation of capital to alternative investments, largely because of the asset class' ability beat rising inflation and incur less risk than traditional investments. According to a recent report by Cliffwater LLC, an adviser to institutional investors, between 2006 to 2012, State pension funds more than doubled their allocations to alternative investments, like private equity, real estate, hedge funds, hard assets and commodities. Accumulating almost $600 billion in assets, these nontraditional investments now comprise 24 percent of public pension fund holdings. Where did the capital come from? It would seem that the funds dropped their investments in stocks to 49 percent from 61 percent, over the last six-years.
It has become increasingly evident that in the
uncertain global economy, alternative assets have become more appealing
(than traditional assets) to both pension fund managers and
institutional advisers. Although there is no guarantee that every
alternative asset will consistently outperform traditional assets, for
now State pension funds have good reason to support a move toward investing in alternative investments.
Pension Funds Shoveling Money Into Alternative Investments
Posted by Michael Young
An entrepreneur at a young age, I began my first business when I was 9. I would sneak on to the private golf club course and search for lost golf balls in the woods and water. Some days I would find a hundred or more. After taking them back home and washing them thoroughly, I would return to the golf course and sell the balls I had found, a dozen at a time.
The point I am getting at is that I have always found unconventional ways to earn and save money.