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San Bernardino County drops Oaktree convertible bond strategies

San Bernardino County (Calif.) Employees' Retirement Association terminated Oaktree Capital Management (OAK) from $70 million in convertible bond portfolios, said Adam Sands, pension fund spokesman, in an email.

The $9 billion pension fund's board approved the termination at its May 4 meeting. In a memo to the board recommending the termination, Jake Abbott, investment officer, said the investments “were made at a time when there was a dislocation in the convertible market and valuations were highly attractive. Looking forward, staff no longer believes that the potential benefits of toehold positions in dedicated convertible bond strategies justify the allocation.”

Mr. Sands said the funds will “be deployed to meet the asset allocation needs of the portfolio.”

The $70 million portfolio was made up of Oaktree High Income Convertible II, OCM Convertible Trust and Non-U.S. Convertible Securities Portfolio.

The pension fund still has about $9.5 million invested in closed-end real estate fund Oaktree Real Estate Opportunities Fund V, to which it originally committed $25 million in 2012.