Metropolitan Government of Nashville (Tenn.) and Davidson County Employee Benefit Trust Fund plans to issue an RFP in early September for a general consultant, Fadi BouSamra, CIO of the $1.7 billion fund, wrote in an e-mail response to questions.
Segal Advisors, the fund’s current consultant, is ending the fourth year of a five-year contract, Mr. BouSamra wrote. The firm can rebid.
Also, the fund’s investment committee expects to meet sometime in the next two months to revise its investment policy, and will consider allowing up to 10% to be invested in hedge funds as part of a new strategy expected to begin in 2010, in an effort to reduce volatility, Mr. BouSamra wrote. Mr. BouSamra said in a telephone interview that the hedge fund allocation would come from the equity allocation.
Investment staff has recommended hiring a separate hedge fund consultant, but it’s uncertain when the fund will begin hiring hedge fund managers, he added.
The fund currently has 36% in fixed income, 26% in U.S. large-cap equities, 17% in international equities, 10% in U.S. small-cap equities, 6.5% in real assets, 2.5% in private equity, and 1% each in U.S. midcap equities and cash. The fund’s target allocation is 35% fixed income, 21% U.S. large-cap equities, 15% international equities, 14% real assets, 10% U.S. small-cap equities, 3% private equity and 2% low-volume strategies.
Separately, the fund hired Champlain Investment Partners to run $30 million in active domestic midcap core equities, Mr. BouSamra wrote.
Champlain, which already runs $7 million in active domestic small-cap core equities for the system, was chosen over the other finalists, Principal Global Investors and Wellington Management because of a “comfort level based on firsthand experience,” Mr. BouSamra wrote.
Segal Advisors assisted with the invitation-only search.