Florida State Board of Administration, Tallahassee, is undertaking an asset/liability study that could raise its international equity and alternatives allocations beyond their statutory ceilings, now 25% and 10%, respectively.
The board oversees $137.9 billion in assets.
FSBA staff plan to seek trustee support for a request to the Florida Legislature to raise the statutory ceilings so when the FSBA decides on a new allocation it will be able to implement it.
Increases in the ceilings to at least 35% in international equity and 15% in alternatives were discussed at the FSBA investment advisory council meeting March 3. Alternatives consist of private equity, venture capital, distressed securities and hedge funds.
Decisions on the amounts would come after FSBA staff discussions with trustees and consultant Ennis Knupp, Dennis D. MacKee, communications director, said after the meeting.
Ennis Knupp is expected to complete the asset/liability study and present its recommendations in June, Mr. MacKee said.
One preliminary scenario Ennis Knupp presented at the meeting would place 3.8% in hedge funds, consisting of 2.1 percentage points in long/short strategies and the remainder in absolute-return strategies. In addition, the study includes consideration of a unified global equity allocation, instead of separate U.S. and non-U.S. equity allocations.
Separately, the board by the end of June plans to search for hedge fund managers to invest up to $500 million.
Cambridge Associates, its hedge fund consultant, is assisting in developing a structure for the hedge fund program, including a plan for searches that are expected to be by invitation rather than RFPs. A date to begin the searches has not been set.
Also, the board hired corporate activist hedge funds Cevian, Knight Vinke and P2 Capital, pending contract negotiations, and is considering hiring Ramius as well. Although each firm could run from $75 million to $250 million, no allocations have been determined, according to discussion at the advisory council meeting.