Equities have outperformed alternatives since the financial crisis, and given the high fees generally associated with hedge funds, some institutional buyers are questioning whether the supposed benefits of alternatives are worth their costs. High-profiles examples include California Public Employees’ Retirement System and New York City Employees’ Retirement System, both of which have recently pulled back from hedge funds.
Karen McQuiston, managing director, Institutional Advisory & Solutions at PGIM, the global investment management businesses of Prudential Financial (PRU) , says the recent drive to dump all alternative funds misses the bigger picture.
