Tate museum's stock market flutter falls short

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The Independent Culture

The trustees of Tate galleries, whose notorious past investments have included a pile of bricks and an unmade bed, have lost £1m investing in hedge funds, it emerged yesterday.

The current and former trustees who were responsible for the hedge fund investments were leading financiers including Treasury minister Lord Myners, hedge fund guru Noam Gottesman, former fund manager Carol Galley and a former Goldman Sachs star banker. At its peak Tate held almost a quarter of all its investment in hedge funds – almost five times the amount a typical pension fund or insurance company would normally put into them.

City experts said this was highly unusual for a charitable foundation.

Accounts released yesterday showed that the Tate ended its relationship with TriAlpha Fund Managers, which was responsible for investing its reserves in hedge funds, after the financial turmoil.

The Tate had £6m of its £27m investments in hedge funds at the start of the financial year – an unusually large percentage for a not-for-profit institution. It sold the assets at a 17 per cent loss. The accounts stated: "During 2008-09 Tate liquidated the hedge fund investments resulting in TriAlpha ceasing to act as an investment manager to Tate. The proceeds of the hedge fund sales are currently held as cash."

Tate received £54 million of taxpayers' money last year. It got another £8m from the Lottery and other public funding bodies. Its latest accounts show that the trust held £6 million of its total £27 million of investments in hedge funds at the start of its last financial year. But by the end of the year – March 2009 – Tate had sold all its hedge fund holdings, resulting in a 17 per cent fall in value or £1 million loss.

Since then the average hedge fund has risen 19 per cent.