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At Michigan State University, it's out with the old hedge funds and in with the quants.

After posting a 4.3 percent loss in its last fiscal year, the university's endowment is pulling $100 million from four hedge funds and moving the money into computer-driven funds to diversify the portfolio.

Half the money will go to a fund run by Renaissance Technologies, the firm founded by Jim Simons, as the school unwinds its investments mostly from long-short hedge funds, said Chief Investment Officer Philip Zecher. Michigan State is switching strategies for part of the allocation, including its first deployment in quantitative funds, rather than abandoning hedge funds.

"It was a very bad year for a lot of hedge funds; it was a particularly bad year for the styles we were invested in," said Zecher, who began as the first CIO of the East Lansing-based public school in January. "If hedge funds are there to be a diversifier and help manage volatility as well as produce return for the portfolio, it doesn't make sense to have them all doing the same thing."

The value of the endowment fell 2.4 percent to $2.35 billion as of June 30, taking into account investment losses and spending on operations plus fundraising contributions. Most college endowments lost money on their investments in the year ended in June for the first time since 2009. About 450 endowments lost 2.6 percent on average in the same period, according to an estimate by Cambridge Associates.

Some endowments and pension funds are decreasing allocations to hedge funds because of poor returns and high fees. Berea College is unwinding about $42 million in hedge fund commitments this year from its $1.1 billion endowment, as hedge fund performance contributed to the Kentucky school's investment decline of 1.1 percent.

Michigan State's 10-year annualized return is 5.5 percent. The school's investment declines were led by a 9 percent drop in its hedge fund portfolio, said Zecher, who has a doctorate in nuclear physics. Switching strategies will provide more diversity in the allocation, rather than putting money in expensive equities or fixed income.

"You've got to put it some place," said Zecher, formerly a partner and chief risk officer at the Stamford, Connecticut-based currency hedge fund EQA Partners, which closed in 2012.

MSU is unwinding investments from activist fund Marcato Capital Management, based in San Francisco; Pennant Capital Management of Summit, New Jersey; and Valinor Management and Wingspan Investment Management, both of New York, according to the school.

Marcato was founded by Richard McGuire, who formerly worked at Bill Ackman's Pershing Square. Pennant, started by Alan Fournier, who previously worked for Appaloosa Management, closed one of its hedge funds last year to boost returns. Valinor, a long-short fund, was founded by David Gallo.

Wingspan is closing down and returning capital to investors, citing poor performance and market conditions, according to a client letter last week. The firm was launched in 2013 by Buck Ratchford, formerly a partner at Goldman Sachs. Its long-short investing strategy focused on leveraged corporate capital structures and targets opportunities across performing, stressed and distressed credit as well as special situation equities.

The fund suspended investors' right to redeem their capital as of Dec. 1, and MSU isn't affected because the school already received its money back, Zecher said.

Representatives of the four firms declined to comment.

MSU is also paying attention to fees.

The Renaissance Institutional Equity Fund generally charges a 1 percent management fee and 10 percent performance fee, the latter about half of the typical industry rate. Investors such as MSU making larger allocations often pay even lower charges.

MSU plans to allocate the second $50 million from the redemptions to other quantitative funds still to be chosen. Zecher said he puts more value in unique data, more than traditional market data or pattern-recognition algorithms.

"To me the really big issue these days is what is the data they're looking at," he said. "How differentiated is the data set that they are able to use in making decisions?"

Michigan State's endowment declined from a record high $2.41 billion as of June 2015.

The school's hedge fund allocation dropped to a quarter of the fund from 29 percent a year earlier, mostly because of performance.

After hedge funds, its next-largest allocation in the fiscal 2016 year is U.S. equity at 19 percent, similar to last year's allocation, followed by private investments at 17 percent, up from 14 percent the previous year. MSU is also allocating about 14.2 percent to equities in developed countries outside the U.S., down from 13.7 percent the previous year.