Metropolitan Government of Nashville (Tenn.) and Davidson County Employee Benefit Trust Fund will issue an RFP as early as next week for a hedge fund-of-funds manager, confirmed Fadi BouSamra, chief investment officer.
Investment staff first announced the search in November, but spent the ensuing six months educating the fund's investment committee about hedge funds as well as researching hedge funds of funds, Mr. BouSamra said in an interview.
The mandate is for a $195 million separately managed long/short equity hedge fund of funds. The investment is Nashville-Davidson's first move into hedge funds.
“We are looking for a ‘fund of one' in order to eliminate the risk that comes from being in a limited partnership with other investors. With a separately managed account, we retain discretion over the investment strategy and can risk exposures. This higher level of control gives us more confidence about investing a 10% allocation of our fund,” Mr. BouSamra said.
The selected manager will work closely with consultant Summit Strategies, hired by the fund in February, in helping staff create a hedge fund investment policy for the plan. Mr. BouSamra said he expects to tap the expertise of the hedge fund-of-funds manager “sometime down the road” as the plan's investment officers consider new asset classes.
Mr. BouSamra said he expects responses to the RFP will be due by the end of May. A timeline for manager selection has not been finalized yet.