Germany’s largest public pension scheme, BVK (Bayerische Versorgungskammer), is planning to add two or three more funds of funds to its already sizeable roster.
The $68 billion scheme, which is based in Munich, currently holds seven FoHFs that manage a total of $3.7 billion. While many investors are looking increasingly to invest directly, BVK’s relatively small hedge fund team still sees FoHFs as the most effective way to implement its investment strategy.
Typically, BVK will look to invest in a multi-strategy vehicle, and then request more ‘bespoke’ services if the allocation works.
The scheme places more importance on funds that meet their return target and provide a stable returns profile than those that generate excess returns, partly due to its master/feeder structure as the manager for a number of smaller public pensions, which have their own varying return targets.
The scheme is understood to be ‘very open’ to FoHFs with a particular skew towards emerging managers, as it believes there is a ‘sweet spot’ in terms of delivering alpha.