March 21, 2024

How Hedge Funds and Alternative Credit Support Maryland’s Retirees

How Hedge Funds and Alternative Credit Support Maryland’s Retirees

Andrew C. Palmer, Chief Investment Officer of the Maryland State Retirement and Pension System, dives into how hedge funds and alternative credit generate returns that support Maryland’s retirees.

Key Takeaways:

  • The Maryland State Retirement and Pension System invests in hedge funds to help support retirees and local communities across the state.
  • Hedge funds help the pension fund meet its investment goals, reduce the volatility of returns, and diversify its investments.
  • Investments in hedge funds and alternative credit help ensure the System and its beneficiaries are protected from turmoil in the markets and provide reliable returns no matter the market conditions.


[00.00-00.09] Hedge funds are kind of a Swiss Army Knife of investing. There’s a different blade for anything you want to do. Generally, not being able to use them would tend to increase our portfolio risk.

[00.09-00.20] Maryland State Retirement System represents about 415,000 employees and retirees in the state of Maryland, and it’s made up of teachers, state troopers, judges, local government officials.

[00.21-00.35] It’s about $3.5 billion that we pay out every year, so 75 percent of that goes right into the state of Maryland for housing, healthcare, food. It is very important in their life planning and is an economic driver.

[00.35-00.51] My role is to work with the Board on setting asset allocation. It’s a pool of about $65 billion. We have an investment style that is designed to reduce the volatility of returns as much as possible. Diversifiers are there just to smooth our rate of return.

[00.52-01.01] There are elements of growth and diversification from asset classes like hedge funds and private credit. Sitting here today, I have no idea what the future is going to hold.

[01.01-01.11] You can buy insurance when things are good, and you are preparing for bad times. That’s why we have these asset classes in the portfolio insuring us against bad times.