Rhode Island pension fund hires 12 hedge fund managers, to select 6 more
By Christine Williamson | November 11, 2011 2:35 pm
Rhode Island Employees' Retirement System, Providence, authorized investing in 12 hedge funds, and the $7 billion system will invest in six more funds in December or January.
The Rhode Island State Investment Commission, which manages the pension plan, on Sept. 28 approved hiring global equity managers Ascend Capital, Davidson Kempner Capital Management and Elliott Associates; each received $60 million. Real-return managers Brevan Howard Asset Management and Och-Ziff Capital Management Group each received $75 million and D.E. Shaw Group was awarded $50 million, said Kenneth Goodreau, chief investment officer.
At its Oct. 26 meeting, the commission selected credit manager Gracie Credit; global equity managers Mason Capital Management, Samlyn Capital and Viking Global Investors; and real return managers Winton Capital Management and Capula Investment Management. They will likely receive mandates of similar size to the first six firms, although the final allocations remain to be determined, Mr. Goodreau said in an interview.
The commission likely will complete the investment of a new 15% allocation to hedge funds, about $1.1 billion in current dollars, in less than six months, Mr. Goodreau said.
Mr. Goodreau stressed that retirement board members have been studying hedge fund investments for three years and “they were really ready when we started to present the hedge fund managers we wanted to hire.”
Hedge funds are included within the pension fund's existing asset classes, rather than a separate asset category, Mr. Goodreau said. Of the 15% hedge fund allocation, 2% will be included in the fund's fixed-income portfolio, 5% in a real-return portfolio and 8% in global equity.
Hedge funds are meant to be a “diversifying complement” to the rest of the fund's portfolio, Mr. Goodreau said.