The $7.2 billion San Diego County Employees Retirement Association board adopted “in concept” a model to outsource the duties of in-house investment management staff to an outside firm, which it calls a dedicated adviser, and will distribute an invitation-only RFP as early as March 26.
The pension fund's board also adopted a new asset allocation that adds leverage.
Six months ago, the board outsourced its CIO function to Integrity Capital Services. The “dedicated adviser” will implement the asset allocation recommended by ICS. Integrity will be able to bid for the RFP, Johanna Shick, association spokeswoman wrote in an e-mail.
Adding leverage to the new asset allocation brings the total target allocation to 135%. Of that, 40% is allocated to U.S. Treasuries; 20% to global equities; 10% each to private equity, real estate, emerging markets debt, asset allocation strategies, relative value and natural resources and other real assets; and 5% each to emerging markets equities, high yield and TIPS.
The current allocation is 24% global equities, 23% domestic equities, 25% domestic fixed income and 4% international fixed income.
Separately, the board will appeal a U.S. District Court judge's dismissal of its lawsuit against hedge fund Amaranth Advisors; the hedge fund's founder, Nicholas M. Maounis; and three of its managers.
Judge Deborah A. Batts dismissed the case March 15 “primarily because the SDCERA contract contained routine disclaimers that advise on some level of risk,” the association stated in a news release.
Mitchem joins State Street?
She had been a managing director and head of U.S. defined contribution at BlackRock.
Ms. Mitchem could not be reached for comment.
State Street spokeswoman Marie McGehee declined to comment.
Kentucky Teachers fund gets opportunistic in credit
The $13.3 billion Kentucky Teachers' Retirement System is planning investments in opportunistic credit after it completes due diligence on the new strategy, confirmed Gary Harbin, executive director.
He said system officials have been studying the strategy for close to a year and aim to complete due diligence by the May 7 investment committee meeting.
The size of the allocation has not been determined.
The system would likely work through consultant Ennis Knupp to find managers for the strategy, Mr. Harbin said.
Visteon changes pension gears
Visteon Corp. would keep pension plans covering about 21,000 employees and retirees intact under a revised Chapter 11 reorganization plan submitted for U.S. Bankruptcy Court approval, according to Crain's Detroit Business, a sister publication of P&I.
The initial plan submitted in December would have terminated three defined benefit plans and transferred the obligations, which were underfunded by more than $500 million, to the PBGC.
Visteon has four DB plans with combined assets of $936 million as of Nov. 30.
Vulcan contributes stock to pension trust
Vulcan Materials on March 15 contributed 1.19 million shares of common stock to its master pension trust, according to an SEC filing.
The shares were valued at $48.57 each as of their close on March 19 for a total value of $57.8 million.
The company wrote in its annual report that it plans to make $72.5 million in contributions to its pension plans in 2010. The pension plans were valued at $493.6 million as of Dec. 31, according to the annual report.
N.J. pumps millions more into hedge funds
New Jersey State Investment Council on March 18 approved a recommendation by staff of the state's Division of Investment to invest $100 million each in two new hedge funds managed by Brevan Howard Asset Management and Pershing Square Capital Management, confirmed Andrew Pratt, a spokesman for the council, which oversees the $67.3 billion state employees' pension fund.
Additional investments of $250 million each were approved for existing hedge funds of funds managed by Goldman Sachs Asset Management and Rock Creek Group.
The new allocations bring Goldman Sachs' total managed in hedge fund-of-funds strategies for the system to $597 million and Rock Creek to $494 million.
The New Jersey pension fund will have $3.6 billion in hedge fund investments after the new commitments are funded, according to meeting materials.
Council members also approved commodity derivative investments totaling $500 million. Cargill was awarded $150 million to manage in a commodity-linked note, according to a March 12 memo to the investment council from Ray A. Joseph, acting director.
The remaining $350 million will be invested in one or more new CLNs.
Virginia could cut retirement fund contribution
Virginia will reduce its contribution to the $49 billion Virginia Retirement System by about $620 million over the next two years, if, as expected, Gov. Bob McDonnell signs a budget bill passed by the state's General Assembly.
But another provision in the bill would require the state to repay the money over 10 years beginning in 2013, plus interest based on VRS' assumed rate of investment return at the time, according to a legislative aide who asked not to be identified.
The Virginia Retirement System's assumed rate of return now is 7.5%, the legislative aide said.
According to the aide, the state budget included the pension contribution reductions because the state's constitution requires a balanced budget.
The aide said the state's annual contribution to the Virginia Retirement System is about $500 million, and added that Mr. McDonnell is expected to sign the budget bill by mid-April.
Pennsylvania system boosts absolute return
Trustees of the $46.7 billion Pennsylvania Public School Employees' Retirement System approved an increase in absolute-return strategies to 10% of assets or about $1.2 billion in current dollars, up from 7.5%.
Information about how investment staff intends to invest the additional cash and the funding source for the increase was not immediately available.
The decision was made at the fund's March 12 board meeting.
The Pennsylvania public school fund made its initial allocation — which combines hedge funds and other alternative investments — in March 2009.
Lehman seeks to launch asset manager
Lehman Brothers Holdings hopes to establish an asset management business to manage and administer the commercial real estate, residential mortgage, principal investments and private equity, corporate debt and derivatives assets of the bankrupt firm and its affiliates.
As part of a bankruptcy filing, which included seeking authorization to establish the business, Lehman said that while the capabilities of the business are designed for the administration of the debtors' assets, the business is also “well suited for management of similar third-party assets, and the production of revenues that will benefit the stakeholders of that entity.”