Arizona Public Safety Personnel Retirement System, Phoenix, committed up to $40 million each to absolute-return funds LSV Special Opportunities Fund III and Luxor Capital Partners, confirmed James Hacking, administrator of the $6.4 billion system.
“(LSV) thinks that there’s a $60 billion to $100 billion opportunity from hedge funds of funds, banks, etc. that need liquidity,” Mr. Hacking said in a telephone interview. “The dislocation in financial markets during 2008 led many investors in hedge funds to make a run on liquidity. So that’s what they’re selling to raise cash. This fund buys those illiquid assets at a discount.”
The LSV event-driven multistrategy fund produces “substantial long-term risk-adjusted returns with a monthly volatility lower than the S&P 500,” Mr. Hacking said. “The firm will invest in equity and debt with, perhaps, a bias toward credit instruments including distressed debt.
Both investments will be in the system’s absolute-return category.
The system also increased its previous commitment to ORG AZ Secondary Opportunity real estate fund to $97 million from $65 million.
“This fund invests in relatively small secondary interests in diversified real estate made available by distressed investors,” Mr. Hacking said. “The objective of the fund is to acquire limited partnership interests in real estate, natural resources and infrastructure funds, both domestic and international, that are available from distressed sellers.”
