Oakland County Employees’ Retirement System, Pontiac, Mich., is searching for long/short equity hedge fund managers to handle a total of $75 million.
It’s a new asset class for the $1.5 billion fund, the result of an asset allocation study conducted in early 2009 by Asset Consulting Group, said Judy D. Fandale, retirement administrator.
“The asset allocation showed that the fund would benefit from long/short equity investments to better control volatility,” Ms. Fandale said.
It hasn’t been determined whether the fund will invest directly in long/short equity hedge funds or through hedge funds of funds.
An RFP was not issued. Interested parties should contact Asset Consulting Group directly, Ms. Fandale said. She expects that the fund’s board will interview managers in April or May.
According to the new asset allocation, equities were trimmed to 50% from 65%, with five percentage points going to long/short equity hedge funds and the remainder added to fixed income, bringing it to a 40% allocation.
As part of last year’s asset allocation change, the system revamped its fixed-income portfolio to include 25% in core, 10% in core plus and 5% in global bond strategies to better diversify the fund, Ms. Fandale said.
Loomis Sayles, WAMCO and Income Research and Management were the fund’s previous intermediate bond managers. The amounts each managed could not be learned.
Loomis Sayles was awarded the $148 million core-plus mandate and will convert its existing portfolio. C.S. McKee was hired to manage $372 million in core bonds and Franklin Templeton to manage $74 million in global bonds.
TCW had been selected in 2009 to manage the core-plus bond portfolio, but trustees decided not to fund the allocation after organizational changes at the firm following the departure of Jeffrey Gundlach, fixed income chief investment officer, in December, Ms. Fandale said.