Pensions and Hedge Funds

I never understood why they would ever invest with hedge funds. The fees are crazy high and I'm not sure what most of them give you in terms of risk management and returns. It seems like they would do just as well hiring a Goldman Sachs or Morgan Stanley to handle a portion of their portfolio. Now there are probably personal relationships involved in handing out this business or maybe something even more but it never made sense to me.

I have been studying the funds in my 401K and IRA’s. I don’t think any of them are invested in hedge funds.

My guess the pensions feel they need a very large %return. Their future obligations are so large, they have to reach for higher returns.

My 401k doesn't have any hedge funds as choices. The funds I'm invested in are basic category funds like large-mid-small caps, foreign and bonds.