A large California pension fund again delayed a vote on whether to invest in hedge funds as its directors weigh a smaller set of commitments than previously disclosed.
On Wednesday, the overseers of San Francisco Employees’ Retirement System considered new proposals from board Chairman Victor Makras to allocate 3% or zero in hedge funds, according to a person who attended the board meeting. The retirement system’s staff countered with a new suggestion of 5%, down from the 15% it endorsed for much of 2014.
Board members agreed to table the discussion until February so staff could study the suggestions from Mr. Makras. It is the fourth time this year directors suspended a final decision on the matter.
The debate in San Francisco highlights the new doubts about hedge funds amid concerns about high fees, lackluster returns and a retreat by the largest public pension in the U.S.
The California Public Employees’ Retirement System, known by the acronym Calpers, in September announced that it would be shedding its entire $4 billion in hedge-fund holdings over the next year. Calpers said the investments were too small a slice of its $298 billion portfolio to justify the time and expense they required.
About half of all U.S. public pensions have some sort of hedge-fund investment, according to data tracker Preqin. Retirement systems have loaded up on so-called alternative investments over the past decade as they moved away from stocks and bonds.
The board overseeing the $20 billion San Francisco retirement system began debating a new 15% hedge fund investment after its new chief investment officer suggested the move early in 2014. Board member Herb Meiberger was openly opposed to the idea, arguing that hedge funds have blown up in the past and aren’t the only investment alternative.
At Wednesday’s board meeting Mr. Meiberger agreed with the decision to table the final decision, said a person who attended.