WILTON, Conn. (HedgeWorld.com)–Hospitals and health care systems with US$500 million to US$999 million in assets have higher percentage allocations to hedge funds than smaller or larger organizations, according to a first-time survey of these institutions by Commonfund.
This new annual study of 152 public and private hospitals and health care systems with combined assets of US$78.4 billion covers the 12 months from December 2001 to December 2002. It shows that the US$500 million to US$999 million group has 14% of operating fund assets in alternatives, and within alternatives, 61% of the investments are in hedge funds.
These organizations’ defined benefit pension plans, invested separately, are 18% in alternatives, and hedge funds constitute 67% of those assets. Institutions in the next middle grouping, with US$200 million to US$499 million in assets under management, also had a relatively high percentage of alternatives in hedge funds.
By comparison, 152 organizations taken together have 9% of operating funds in alternatives. Of that, 55% are in hedge funds. Among all institutions’ pension funds, 8% of assets are in alternatives, and hedge funds make up 54% of this category.
Commonfund surveys of university and college endowments also show that a large and probably a growing percentage of those institutions’ alternative assets consist of hedge funds Previous HedgeWorld Story.
Funds of Funds
Overall, significant numbers of health care organizations have alternative investments. For operating funds, 70 survey respondents had alternative assets. But this number was smaller for pension pools: Only 44 respondents invest pension money in alternatives. Many health care institutions report that they use funds of funds, reflecting their own limited experience in alternatives.