Knoxville (Tenn.) City Employees' Retirement Pension Fund named Blackstone Alternative Asset Management to run $10 million in a hedge fund of funds, confirmed Mike Cherry, executive director of the $416 million retirement plan.
Mr. Cherry said in a telephone interview that in early 2009, the fund terminated Union Bancaire Privee, which had exposed about $1 million of the pension plan's hedge fund allocation to Bernard L. Madoff Investment Securities.
“(UBP) had done reasonably well,” Mr. Cherry said, noting that the termination came as a result of due diligence related to the Madoff exposure and liquidity issues.
Mr. Cherry said the UBP assets had been used to fund benefit payments.
He said the pension fund also has about $10 million in a hedge fund of funds run by Cadogan Management.
Mr. Cherry said the fund's allocation to hedge funds of funds was cut two percentage points earlier this year, to 5%.
The pension fund's current target asset allocation is 60% equities, 19% fixed income, 15% real assets — real estate, private equity and energy and commodities — 5% hedge funds of funds and 1% cash.