San Diego County Employees Retirement Association committed $115 million to the BlackRock Global Ascent Fund and the $35 million to BlackRock’s Emerging Markets Macro Fund.
Funding for the two hedge funds would come from the $7 billion association’s target 70% stable value allocation.
The system’s staff reported that they also plan to increase the allocations of global macro hedge fund managers Brevan Howard Asset Management to $165 million from $60 million, Bridgewater Associates to $100 million from $46 million, and Graham Capital Management to $90 million from $60 million, but haven’t done so already due to capacity constraints, Lisa Needle, assistant chief investment officer, told the board. Ms. Needle did not provide the funding source.
Lee Partridge, the association’s outsourced CIO, said he plans to search for one or two more hedge fund managers to manage asset allocation investment strategies, including global macro and managed futures.
Separately, the board took TCW up on its offer to redeem the system’s $50 million investment in TCW Mortgage Credit Fund after members of the fund’s investment team left the firm, Ms. Needle said.
The board also added SSgA to its preapproved list of derivatives and futures managers. Mr. Partridge and his firm, Integrity Capital, and association staff can hire SSgA “to replicate the exposure of any policy benchmark.” A memo attached to the agenda said there was no need to put a dollar limit on exposure. SSgA would be limited to an expected 30-basis-point tracking error.
The association received responses to its RFP for a dedicated adviser from Aegis Capital Group, BlackRock, CommonFund, Hammond Associates, Makena Capital Management, Meketa Investment Group, Morgan Creek Capital Management, Rogerscasey and Salient Partners, according to materials from the June 17 meeting of the system’s ad hoc search committee. The selected adviser would perform the function of an investment staff, excluding CIO.
The association’s board has yet to decide whether to continue with this approach or revert to an in-house approach for which Mr. Partridge would select “a dream team” investment staff employed by the association, said board member Garry A. Sobeck during the full board meeting June 17. Another proposal to outsource the association’s entire staff to Mr. Partridge’s Integrity Capital Services was voted down at the association’s March 18 meeting.