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UK's West Yorkshire Pension Fund halves hedge fund investments

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By Maiya Keidan and Carolyn Cohn

LONDON (Reuters) – A British government pension scheme that looks after local authority retirement pots in West Yorkshire has more than halved its stake in hedge funds in favour of other alternative assets, according to its latest annual report.

West Yorkshire Pension Fund, which has 13.6 billion pounds in assets under management, had cut its hedge fund investments to 127.6 million pounds as of March 31 from 254.3 million pounds the year before.

The pull-back follows the 10 largest schemes in England and Wales increasing their total allocation to hedge funds by a third in the previous financial year.

The number of active British public pension fund investors in hedge funds rose in 2017 to 43 from 40 in 2016, data from industry tracker Preqin showed. But that number has since fallen to 41 in 2018, according to the research.

The pension scheme invested in a number of hedge funds, with one of its largest allocations in a fund of funds run by BlackRock, the world’s largest asset manager.

“Hedge funds were reduced in favour of better, more consistent returns from other alternative asset classes, which have been increased in the year,” a spokesman for the pension fund told Reuters.

The spokesman did not identify the other alternative asset classes, but the report shows they included private equity and infrastructure.

Hedge funds made gains of 2.1 percent for the pension scheme in the 12 months to the end of March compared with the average hedge fund, which made 5.9 percent for the same period, according to data from industry tracker Hedge Fund Research.

($1 = 0.7729 pounds)

(Reporting by Maiya Keidan; Additional reporting by Simon Jessop; Editing by Mark Potter)

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