Byline: Diane Levick
Jan. 13--Aetna Inc., one of the nation's largest health and group benefits insurers, is branching out -- in a small way -- in a specialized area of investment management.
Aetna Capital Management LLC, which has been overseeing Aetna's investments in hedge funds for four years, will now privately do the same for some outside clients, Aetna confirmed Friday.
Aetna has about $600 million of its own -- a tiny percentage of its invested assets -- in hedge funds. Hedge funds are pooled investment vehicles that use sophisticated strategies to try to deliver a specific or 'absolute' return despite the ups and downs of traditional stock and bond markets.
As a result, hedge funds do not try to beat benchmarks, such as the S&P 500 index, that mutual funds target.
Aetna Capital Management won't market its services publicly. Instead, it will start to work directly with some institutional clients -- endowments, foundations and pension plans -- and with individuals who have a high net worth, said Mark Garber, president of the Aetna unit.
West Hartford-based Aetna Capital Management does not run hedge funds itself but evaluates outside money managers and allocates money to a group of them.
Aetna decided to open up the operation to outside clients 'as a way to take advantage of some of Aetna's internal expertise and to generate an additional source of profits for the company,' Garber said in an interview.
Aetna sold its investment management business more than four years ago as part of a deal with ING Group. Aetna does not view the Aetna Capital Management move as a first step in re-creating what was sold.
'This is not a major strategic initiative in terms of the overall company,' said Aetna Inc. spokesman Fred Laberge. 'We're leveraging what has been a successful operation in a targeted way.....This is nothing like what we've done in the past in terms of having a financial services operation.' Aetna Capital Management now has 10 employees, having hired six of them last year. The firm, now expecting external customers, just hired Oaks, Pa.-based SEI Investments to administer the business.
Garber says Aetna Capital Management does not have a feel yet for how much it will attract in outside clients' assets.
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TICKER SYMBOL(S): AET
