James Says Use Buyouts to Shoot Lights, Not Hedge Funds

Blackstone Group LP President Tony James said the decision by the $298 billion California Public Employees’ Retirement System to exit its hedge-fund investments was “wise” because the pension had “poor” returns on the $4 billion it invested in the asset class.

“A lot of people think about hedge funds as a way to get higher returns,” James said today at the PartnerConnect LP-GP Summit in New York. “Hedge funds are a way to play the stock market with somewhat lower volatility and somewhat lower returns. You don’t expect hedge funds to get shoot-the-lights-out returns. You save that for private equity and for real estate.”