West Midlands invests in fund of hedge funds

LONDON (Reuters) - The West Midlands Pension Fund, one of the UK's largest local government schemes, has invested 40 million pounds in a fund of hedge funds.

Goodhart Partners said on Thursday the pension fund, which has 7 billion pounds in assets, had invested in its Global Long Short Equity Fund, which comprises 11 hedge fund portfolios.

The move shows some pension funds are continuing to invest in hedge funds despite poor returns last year. Earlier this year Goodhart won a 65 million pound mandate from the UK railway scheme Railpen. Britain's universities pension fund, USS, has also indicated it is going ahead with plans to invest in hedge funds.

A fund of hedge funds includes different managers focusing on a variety of strategies with the aim of spreading risks and increasing the potential for returns.

Hedge funds are benefiting from the global markets' rally. The Credit Suisse Tremont Hedge Fund Index is up 11.57 percent in the year to date, while the London share market's FTSE 100 .FTSE index is up 2.6 percent over the same period.

No one at the West Midland pension scheme was available for further comment.

Goodhart has about $750 million (470 million pounds) in assets under management, mostly from UK pension funds, a spokeswoman said.

Goodhart was formed earlier this year through the management buyout of the multi-manager business from WestLB Mellon Asset Management.

(Reporting by Cecilia Valente; Editing by Greg Mahlich)