Chicago Teachers mulls expulsion of hedge fund investments
By Barry B. Burr | November 19, 2012 3:36 pm
Chicago Public School Teachers' Pension and Retirement Fund might drop two hedge fund-of-funds managers and could get out of the hedge fund asset class entirely because of liquidity concerns, according to Kevin R. Huber, executive director.
Executives from K2 Advisors and Mesirow Advanced Strategies' Mesirow Absolute Return Fund are scheduled to appear at Tuesday's meeting of the board of the $9.7 billion pension fund before trustees make a decision, Mr. Huber said in an e-mail.
Because of current liquidity concerns, the teachers' fund “may exit the hedge fund asset class in order to assist with cash needs,” Mr. Huber said in the e-mail. “However, the board requested that K2 and Mesirow make presentations before finalizing this decision and therefore both managers are presenting tomorrow.”
The liquidity issue concerns the pension fund's need to pay benefits, Mr. Huber said in the e-mail.
K2 manages $74.2 million; Mesirow, $75 million.
Pluscios Management, the pension fund's other hedge fund-of-funds manager, running $25.3 million, “has a different liquidity profile and therefore is not presenting tomorrow,” Mr. Huber said in his e-mail. The board hasn't made a decision on Pluscios, he added.
The pension fund's entire $174.5 million hedge fund allocation is with the three managers.
Investment consultant Callan Associates is assisting.
In addition, the board on Tuesday plans to consider “the feasibility of making an allocation” to Fortress Japan Opportunity Fund II, Mr. Huber said in his e-mail.
Fortress Investment Group is raising money for the new real estate fund, Mr. Huber said in his e-mail
The board has invested $22.5 million in the Fortress Japan Opportunity Fund.
Townsend Group, the fund's real estate consultant, is assisting.