Illinois Teachers doubles Grosvenor account, makes other changes

Greg Turk
Greg Turk

Illinois Teachers' Retirement System, Springfield, has more than doubled the hedge fund-of-funds assets managed by Grosvenor Capital Management to $998 million and terminated K2 Advisors.

The move is part of the $40.8 billion pension fund's restructuring of its $2.1 billion hedge fund portfolio to include more direct investments in hedge funds.

Greg Turk, director of investments, stressed to trustees at an investment committee meeting on Thursdaythat K2's termination is the result of the portfolio reconstruction, not performance problems or organizational concerns.

“ Grosvenor has more resources and will be a better fit” with internal TRS hedge fund officials, Kenneth Musick, investment officer for hedge funds, told trustees.

The $537 million K2 managed for the pension fund will be consolidated into Grosvenor's $461 million portfolio. Grosvenor's portfolio will be the source of at least some of the new direct hedge fund investments, said R. Stanley Rupnik, chief investment officer, in an interview.

At Friday'sboard meeting, Albourne Partners was hired as the pension fund's first hedge fund consultant. The firm will provide manager research and selection advice, as well as portfolio construction assistance.

Also hired were BlackRock (BLK), to provide the pension fund's first risk management system, and Investment Metrics, to provide its first performance measurement system.

In other news from Friday's meeting, TRS trustees approved a $100 million commitment to Blackstone Real Estate Partners Asia.

Also, Strategic Global Advisors was graduated from the pension fund's emerging managers program into its $9.2 billion international equity program. Initially, SGA will manage about $150 million, but that will grow to a full 2% — about $185 million — of the international stock portfolio.

SGA's original mandate was for active all-cap core international equities, but will move to managing small- and large-cap core strategies within the larger portfolio.