Recent market chatter suggested that public pension funds – as a group, one of the largest allocators of capital to hedge funds – were considering reducing their target rates of return.  For example, recent news reports suggested that the California Public Employees’ Retirement System (CalPERS), the largest public pension fund in the U.S., was considering reducing its target annual rate of return from 7.75 percent to 6 percent.  One of the headline responses to the rumored reduction in pension fund investment targets was that such reductions would decrease the capital allocated to hedge funds by pension funds.  The assumption behind this idea was that pension funds invest in hedge funds for alpha, or above-market returns, and because the reduced investment targets would be more in line with beta, or market returns, pension funds no longer needed the market-beating services of hedge funds.  However, while alpha may be one reason why pension funds invest in certain hedge funds, it is by no means the only reason.  In fact, in the wake of the credit crisis, alpha has fallen in the ranking of rationales for pension fund investments in hedge funds, and other rationales are ascendant.  As explained more fully below, those other rationales include, but are not limited to: uncorrelated returns; absolute returns; reduced volatility; sophisticated risk management; access to standout managers; and access to unique assets.  In short, even if pension funds reduce their investment targets – and whether or not they will remains uncertain – pension funds are likely to continue allocating capital to hedge funds, likely at a hastening clip.  See “The Four P’s of Marketing by Hedge Fund Managers to Pension Fund Managers in the Post-Placement Agent Era: Philosophy, Process, People and Performance,” Hedge Fund Law Report, Vol. 2, No. 45 (Nov. 11, 2009).  But as they do, the specific factors on which pension funds base their hedge fund investment decisions are likely to evolve in subtle but important ways.  In other words, while the potentially reduced investment targets likely will not materially diminish the volume of pension fund allocations to hedge funds, they do reflect a shift in the focus of pension funds’ concerns.  For hedge fund managers seeking to raise and retain institutional capital, it is critical to understand pension fund decision-making and to translate that understanding into informed marketing strategies.  Accordingly, this article examines how hedge fund managers may adjust their marketing to pension funds in light of the potentially reduced investment targets.  Or more precisely, this article examines how hedge fund managers may refocus their investment strategies and operations in light of pension fund concerns – because marketing in the hedge fund context should not be a matter of puffery or salesmanship, but rather should be a matter of clearly, candidly and comprehensively conveying a manager’s strategy and operations.  In particular, this article discusses: the potential reduction in target returns; the rationale for pension fund investments in hedge funds; trends and data with respect to such investments; specific marketing strategies that hedge fund managers can employ when targeting pension funds (including discussions of strategy drift, pension fund consultants, liquidity and other relevant matters); and the evolving role of placement agents in connecting pension funds and hedge funds.