The MetLife blimp.
Photograph by Chris Condon — Getty Images

Will pull two-thirds of its investments.

By Stephen Gandel and Reuters
May 5, 2016

Another large investor is ejecting from hedge funds.

On Wednesday, MetLife, after announcing its first quarter earnings, which were lower than expected, said that it plans to pull a good portion of the money the insure has in hedge funds out of the private investment vehicles. MetLife met currently has $1.8 billion in hedge fund investments, and says it will redeem two-thirds of that money and redeploy it elsewhere. MetLife said redeploying the funds could take a number of years because of lock-up periods that make it hard to get out of hedge funds.

MetLife is the latest large investor to rethink investment funds that often carry high fees, and in general have produce disappointing performance. Hedge funds have underperformed the market in five of the past six years.

In an interview with Fortune in January, AIG’s CEO Peter Hancock said the large insurance company was going to have a “much reduced allocation” to hedge funds. Earlier this week, AIG aig confirmed that it would pull $4 billion, or about 40% of the money the insurer has in hedge funds. Last year, Calpers, the large Californian pension fund, became the first large investor to say that it wanted out of private investment vehicles.

Investors pulled $15 billion out of hedge funds in the first quarter, according to Hedge Fund Research. Analysts at J.P. Morgan Chase predict that a total of $25 billion will be withdrawn from hedge funds in all of 2016. Despite the big name departures, that’s still a small fraction of the amount or money in hedge funds.

MetLife’s poor first quarter performance was in due to disappointing returns from hedge funds. MetLife‘s net investment income, which includes returns from investments in bonds, fell 5.5% to $4.71 billion in the quarter. Variable investment income more than halved to $109 million, hit by weak returns from hedge fund investments.

MetLife won a major battle in March when a judge struck down the U.S. government’s determination that it was “too big to fail,” a designation that would likely require the insurer to boost its capital. The government is appealing.

Chief Executive Steven Kandarian said in January that the “regulatory environment” had drivenMetLife to consider splitting off its retail business as higher capital requirements could put the company at a “significant competitive disadvantage.”

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