Hedge funds losing their luster

Major losses at prominent hedge funds are causing pension fund managers to second guess hedge fund investments. Hedge funds managed by Goldman Sachs Group Inc. and AQR Capital Management among others have suffered substantial losses, emphasizing the high-risk element of investing in many hedge funds. Their difficulties have prompted pension funds to wait until the market stabilizes before continuing or increasing investments, The Wall Street Journal reported. Among the pension funds delaying committing their funds is the Ohio School Employees Retirement System. It is permitted to invest as much as 10% of its $11.7 billion in assets in hedge funds, though given recent market turmoil it is in no hurry to do so. Pension funds have been a vast monetary source for hedge funds, so while it is too early to determine whether pension managers will be redeeming their hedge fund holdings, a pullback could be a significant blow to many hedge funds.