Philadelphia Public Employees Retirement System staff could be making a recommendation to tweak rather than completely overhaul the $3.5 billion plans fixed-income portfolio in the next few weeks, said CIO Christopher McDonough.
He said the review was initiated in response to market conditions and likely will result in minor adjustments, not wholesale changes. The funds fixed-income allocation is about 40% of total assets.
Separately, the fund is redeeming a $25 million investment in Goldman Sachs Asset Managements Global Long/Short Equity hedge fund of funds because of organizational concerns. The change was not performance-related, Mr. McDonough stressed. Assets likely will be invested directly with a long/short equity hedge fund manager as part of the funds expansion into direct hedge fund investments that started last year.
Investment officials are opportunistically looking to move half of its 6% hedge fund allocation about $100 million into direct hedge fund investments from hedge funds of funds. The goal is to invest directly in about a dozen hedge fund managers with help from hedge fund consultant Aksia.
To date, $50 million has been invested directly with four hedge fund managers: $12.5 million each to event-driven managers Paulson & Co. and Taconic Capital Advisors, and $15 million and $10 million, respectively, to long/short equity managers Diamondback Capital Management and Karsch Capital Management.