ATP, the statutory Danish pension scheme, is shifting DKr30bn ($5bn) into a series of new in-house hedge funds as it sets out to profit from market turmoil. ATP, which manages DKr370bn on behalf of 4.5m workers, is putting money into hedge fund strategies even as many investors in existing hedge funds are withdrawing their money. Many pension funds have been hit by the plunging value of holdings in external hedge funds, following rapid rises in allocations to hedge funds in the past few years. Both funds which manage money in-house – such as the big Dutch, Swedish and Danish schemes – and funds which use external managers have been reducing exposure to market moves by shifting to hedge fund “absolute return” strategies. But it remains unclear to what extent the crisis in the hedge fund industry, which is having its worst year on record, will lead pension funds to follow wealthy individuals and funds of funds in redeeming investments. ATP is the first client for Citigroup’s effort to reshape its prime brokerage model as a one-stop shop for hedge funds, pooling reporting, administration and other services.
