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Nashville & Davidson County commits $55 million to distressed debt, private equity

Nashville (Tenn.) & Davidson County Metropolitan Government Employee Benefit Trust Fund made three commitments totaling $55 million, said Fadi BouSamra, chief investment officer, in an email.

The $2.8 billion pension fund committed $30 million to OSP Value Fund II, a distressed debt fund managed by O’Brien-Staley Partners. The pension fund previously committed $30 million to OSP Value Fund in 2014.

Also, the pension fund committed $15 million to HarbourVest Partners Co-Investment Fund IV, a multimanager private equity co-investment fund. The pension fund has made commitments to multiple HarbourVest funds, most recently committing $25 million to HarbourVest Dover Street VIII, a secondary private equity fund, in 2013.

The pension fund also committed $10 million to LGT Crown Co-Investment Opportunities Fund II, managed by LGT Capital Partners. The pension fund previously committed $30 million to LGT Crown Europe Small Buyout Fund in 2013.

Separately, the pension fund reported a 7.07% net return for calendar year 2016; the policy benchmark was 10%. Mr. BouSamra said the shortfall relative to the benchmark was “primarily due to the plan’s switch to using the high-yield index as the benchmark for fixed-income alternatives.”

The best-performing asset class for the calendar year was domestic equity, which returned 15.5%, followed by private equity at 10.5%. Other asset class returns were fixed income, which returned 9%; real assets, 6.6%; international equity, 4.1%; fixed-income alternatives, 3.1%; and long/short equity down 1.2%.

As of June 30, the actual allocation was 23.6% fixed-income alternatives, 15.3% private equity, 14.8% fixed income, 13.7% domestic equities, 12.1% international equities, 11.3% real assets, 7% long/short equities and 2.2% cash.

Target allocations are 37.5% domestic and international equity; 15% each alternative and traditional fixed income; 12.5% real assets; and 10% each long/short equity and private equity.