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Nebraska Investment Council to liquidate 12 portfolios of Omaha Schools pension fund

Nebraska Investment Council, Lincoln, voted to liquidate 12 portfolios totaling $666 million that was previously managed by the $1.1 billion Omaha (Neb.) School Employees’ Retirement System as a first step in the transition of the pension fund’s assets to oversight by the council, said Michael Walden-Newman, state investment officer, in an email.

The Nebraska Investment Council, which oversees $23.1 billion in assets, took over the money management of the retirement system effective Jan. 1.

According to a memo from the council’s investment consultant, Aon Hewitt Investment Consulting, the council will be able to liquidate or reallocate about 70% of the legacy pension fund’s assets, while the remaining 30% will be “invested in illiquid positions” that Aon Hewitt said in the memo would “not be in the council’s best interest at present” to sell on the illiquid market. “The discounts to current NAV are too large,” it said.

Reallocations and liquidations will be completed over the next year as the council transitions the Omaha pension fund’s assets to a new target allocation: 30% fixed income, 29% domestic equity, 15% global equity, 13.5% international equity, 7.5% real estate and 5% private equity.

As of Dec. 31, the actual allocation for OSERS was 20.3% real estate, 18.7% global equity, 15.1% real assets, 13.7% domestic equity, 11.5% fixed income, 10.1% private equity, 9.2% hedge funds and 1.4% cash.

Mr. Walden-Newman said the assets from liquidated portfolios would be moved to “other council managers” and noted the liquidation of hedge fund managers is because the council does not invest in hedge funds. Those managers, and the amounts of their portfolios as of Dec. 31, are:

  • Walter Scott & Partners, $210 million in global equities;
  • Tortoise Capital Advisors, $128 million in a master limited partnership portfolio;
  • EARNEST Partners, $86 million in fixed income;
  • NewSouth Capital Management, $65 million in domestic smidcap equities and $19 million in domestic small-cap equities;
  • Fidelity Institutional Asset Management, $44 million in global multisector fixed income;
  • UBS Asset Management, $34 million in the 1 North Equity Healthcare Long/Short Fund;
  • Vaquero Global Investment, $34 million in an emerging markets debt hedge fund portfolio;
  • OrbiMed Advisors, $30 million in a hedge fund portfolio;
  • J.P. Morgan Asset Management (JPM), $11 million in a special situations real estate fund; and
  • Palmer Square Capital Management, $5 million combined in two hedge fund portfolios.

Mr. Walden-Newman had no further information regarding to which managers these assets might be reallocated.