New Orleans City Employees' Retirement System is likely to drop one or two of the worst-performing hedge funds in its alternatives portfolio, said Jerry Davis, board chairman, although he didn't specify which funds. The board of the $365 million plan will meet Sept. 8 to discuss the hedge fund issue and other possible changes for the fall. There are no plans to search for new hedge fund managers if any are dropped.
Separately, the board on Sept. 8 will consider a return to international equity, Mr. Davis said. The asset class was dropped years ago, but Mr. Davis said he believes it may be time to get back in. "It's been a frantic year as we try to see where we are investment-wise," said Mr. Davis. "Asset allocation is an ongoing review."
The retirement system has a 7.5% target rate of return, Mr. Davis said, and the plan is at roughly 4% year-to-date. He noted that the city pays a substantial amount each month to keep the plan fully funded; he would not elaborate on how much the city has contributed. The plan's asset allocation is 60% domestic equity; 30% domestic fixed income; and 10% alternatives. Morgan Stanley is assisting.