Libyan Investment Authority
Libyan Investment Authority Sought to Trim Hedge Funds
The Libyan Investment Authority, the sovereign wealth fund for the country that is currently in civil war and under frequent NATO airstrikes, has cut its hedge fund holdings. According to a document disseminated by a human rights group, the $64 billion sovereign wealth fund sought to reduce its hedge fund holdings after weak returns and high fees. The Libyan Investment Authority had invested $4.5 billion in alternative investments but has since cut that number after a number of bets did not pan out.
The Libyan Investment Authority, or LIA, invested $4.5 billion in so-called alternative assets, according to an LIA “Management Information Report” dated Sept. 30. KPMG LLP, which was advising the fund, recommended reducing the holdings by $2.4 billion amid high fees and sluggish performance, the document shows.
The world’s 11th-biggest sovereign wealth fund turned to financial firms from Goldman Sachs Group Inc. (GS), the fifth-biggest U.S. bank by assets, to HSBC Holdings Plc, Europe’s largest bank, to achieve its goal of 8 percent annual returns. The bets didn’t always work out, raising concern among the fund’s managers that capital would be eroded, the LIA document shows.
“By liquidating the funds we can guarantee capital preservation and ensure reduction in expenses,” the 42-page document said.
Libya established the investment authority to find outlets for its rapidly growing oil wealth. The fund never disclosed detailed information about its holdings or returns. Source
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