Playing By the ‘Legal-List’ Rules

Legal-list allocation limits helped many state pension funds weather the market storm last year.

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Self-imposed hedge fund allocation limits at state pension funds, a protective policy once considered stodgy, have helped many of them weather the market storm this year.

On the other hand, ones that found the lucrative prospect of alternative investing too appealing to pass up include funds in Pennsylvania and New Jersey, both of which have been hit by sobering margin calls after using exotic strategies like portable alpha (see “An Alpha Bet Gone Bad”).

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