Mich. adds to hedge funds
The $45 billion Michigan State Retirement Systems will increase its hedge fund allocation to 6% from 2% and its real return/opportunistic allocation to 4% from 1%.
The Michigan Department of Treasury, Bureau of Investments, which manages the systems, will begin to increase investments in both strategies in fiscal 2011, which begins Oct. 1, Terry Stanton, a Treasury spokesman, confirmed in an e-mail.
Funding will come from reducing private equity to about 14% from about 20%.
Separately, Michigan sold $1 billion in active and passive U.S. equities and active international stocks in the first quarter to meet pension benefit payments, according to minutes from the June 2 investment advisory committee meeting, released Sept. 2.
Jon M. Braeutigam, the bureau's director and CIO, said “raising cash to pay benefits” happens on a quarterly or six-month basis.
Mr. Stanton said total benefits paid by the systems in excess of employer contributions will total about $2.4 billion by Sept. 30, about the same as last year.
Blocking Villalobos suit?
A lawsuit against former CalPERS board member Alfred Villalobos filed by California Attorney General Jerry Brown could be blocked by a U.S. Bankruptcy Court judge.
Judge John Peterson is expected to decide within the next several weeks whether to block the suit that accuses Mr. Villalobos of bribing officials at the $206.7 billion California Public Employees' Retirement System.
Mr. Villalobos, a placement agent, was sued for $95 million by the California Attorney General's Office in May. In June, Mr. Villalobos filed for Chapter 11 bankruptcy protection.
Federal law generally supersedes state law in such cases, so state officials have been seeking a ruling from Mr. Peterson that their case can proceed.
If Mr. Peterson rules to block the California lawsuit, the state could still pursue its claim in U.S. Bankruptcy Court. But the state's claim would be consolidated with other portions of the bankruptcy case and other creditors who are seeking payment in the Chapter 11 case.
Scout acquires Reams
Scout Investment Advisors agreed to buy substantially all of Reams Asset Management's assets. Scout will pay Reams an initial cash payment of about $42 million, according to a filing with the SEC by Scout parent UMB Financial. Reams also will be entitled to additional compensation based on performance, according to the filing.
Reams, with $9.8 billion in assets, will operate as a division of Scout, according to a Scout news release. Scout has $9 billion. A Reams spokesman declined to comment.
GSC files for Chapter 11
GSC Group, an alternative investment manager, filed for Chapter 11 bankruptcy protection in U.S. Bankruptcy Court in New York.
According to court documents filed Aug. 31, GSC had $8.4 billion in assets as of March 31, down from a high of $28 billion. As part of the bankruptcy, GSC executives intend to sell all “assets with economic value,” the court papers state.
GSC, formerly Greenwich Street Capital Partners, was founded in 1994 as a subsidiary of Travelers Group to invest in private equity. It spun off following the merger of Travelers and Citicorp in 1998, the documents state. GSC executives could not be reached for comment.
Fund to sell $48 billion
The $1.39 trillion Government Pension Investment Fund in Tokyo will increase asset sales more than fivefold to about $48 billion this fiscal year as payouts rise with the nation's population aging, according to Bloomberg.
That follows the $8.5 billion raised in the fiscal year ended in March, all through sales of its Japanese bond holdings, Takahiro Mitani, the fund's president, said. Japanese bonds accounted for 71% of the assets as of June 30, while domestic stocks made up 11%.
PBGC sews up pension deal
Gold Toe Moretz Holding will contribute an additional $2 million to the pension plan of workers at a shuttered plant in Burlington, N.C., through Jan. 31, 2013, under a deal with the PBGC, confirmed Marc Hopkins, PBGC spokesman.
As part of the agreement, Gold Toe has given the PBGC a $7.5 million security interest in its property, Mr. Hopkins said. If Gold Toe does not make the contributions, “the agency will monetize its interest in the inventory, which is mostly socks, and use those funds for the benefit of plan participants,” he said.
Under ERISA, the PBGC is required to seek additional protection when more than 20% of a company's employees covered by a pension plan lose their jobs in a shutdown.
AEGON to handle overlay
Leicestershire County Council Pension Fund hired AEGON Asset Management to run an asset allocation overlay for the £2 billion ($3 billion) fund, said Colin Pratt, investment manager.
AEGON will use derivatives and other financial instruments aimed at mitigating market risks and quickly taking advantage of investment opportunities without having to change the underlying portfolio, Mr. Pratt said.
Goodhart in with Concerto
Goodhart Partners, a multimanager firm, hired Concerto Asset Management to run a e60 million ($77 million) long-short corporate credit strategy as part of an absolute-return bond fund, said Julie Bouhuys, founder and CEO of Concerto.
The credit alpha strategy will form part of Goodhart's Target Return Fund.
Group hires BlackRock
National Association of Insurance Commissioners hired BlackRock to assess the industry's potential losses from holding commercial mortgage-backed securities, according to Bloomberg.
BlackRock will review more than 7,000 securities by year-end and calculate loss expectations for the holdings, which will determine how much capital insurers must hold to cushion potential declines, the association said in a statement.
BlackRock won the NAIC contract from among 16 bidders.
N.M. Ed chairman quits
Bruce Malott resigned Sept. 1 as chairman of the $8.55 billion New Mexico Educational Retirement Board, according to a notice on the board's website.
He resigned after revealing to Gov. Bill Richardson that he had borrowed money from Anthony Correra, whose son, Marc Correra, as a placement agent obtained investments for money managers from the board and the $13 billion New Mexico State Investment Council, both in Santa Fe.
Mary Lou Cameron, New Mexico Educational's vice chairwoman, will serve as chairman until the board elects officers, possibly as early as the next board meeting on Sept. 16.
Mr. Malott could not be reached.
Virginia CIO to step down
Charles W. Grant, CIO of the $47.7 billion Virginia Retirement System, will retire when his contract expires in August 2011.
“My decision to step down is due purely to … dedicate more time” to his family, Mr. Grant said in a VRS news release.
Jeanne Chenault, a system spokeswoman, said the VRS board plans to search for a successor without using an executive search firm.