In another sign that hedge funds’ fortunes may be on the rise, the State of Wisconsin Investment Board said it might search for as many as 25 managers and allocate up to 5% of its $62.5 billion “core fund” to absolute return strategies, Pensions & Investments reported yesterday. Not only is the SWIB thinking about hedge funds, these represent the board’s first foray into the space. It’s remarkable, in a way, that major institutions would be considering maiden voyages into hedge funds at this point, after all that’s happened. In another way it’s just a sign that the hedge fund industry has matured to the point where traditionally cautious investors like pension funds look past high-profile problems and drill down into the risk-return profile of the space. So long as rigorous analysis—and not a flailing about for returns—drives decisions like this, it’s a good long-term omen for hedge funds.

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