Big Insurers Send a Wake-Up Call to Hedge Fund Investors
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The American International Group says it will cut its hedge fund holdings in half by the end of 2017CreditBrendan McDermid/Reuters
Like many sophisticated investors, the nation’s largest insurers drank the hedge fund Kool-Aid, pouring billions into the high-fee investment funds and helping drive hedge fund assets to over $3 trillion.
Now comes the hangover.
Steep losses in hedge fund investments during the last quarter damaged many insurance company earnings, reinforcing decisions to rethink the premises that led them to follow the Pied Pipers of finance in the first place.
The American International Group said it would cut its hedge fund exposure in half, to $5.5 billion by the end of 2017 from $11 billion at the end of last year. MetLife said it would slash its hedge fund portfolio by two-thirds, to $600 million from $1.8 billion…
Big Insurers Send a Wake-Up Call to Hedge Fund Investors
