International Paper Co., Purchase, N.Y., plans to search for two hedge fund-of-fund managers this year to create portable alpha in its active $1.8 billion domestic large-cap equity portfolio, said Bob Hunkeler, vice president of trust investments. The $7 billion plan is restructuring the portfolio, which included only risk-controlled and traditional active strategies. The portfolio will be 60% risk-controlled, with the balance split between the other two strategies.
International Paper is working with BARRA RogersCasey to find the managers in an invitation-only search. Each manager should be invested in 20 to 30 partnerships in a diversified portfolio in which the managers have low correlations to each other and to the traditional indexes in order to generate a strong alpha that ranges from 1.5 percentage points to 2 percentage points over the S&P 500, Mr. Hunkeler said.