Massachusetts Pension Reserves Investment Management board will choose the plan's first 10 hedge fund managers at its meeting scheduled for October, and an additional 10 managers as its subsequent meeting in December.
That decision, part of an implementation plan the board approved Tuesday, follows its Feb. 1 vote to carve out roughly $500 million from Boston-based PRIM's $3.8 billion hedge fund-of-funds allocation for a direct hedge fund pilot program, with the goal of boosting performance and trimming fees.
At the meeting, Hannah Gilligan Commoss, a senior investment officer with the $50 billion PRIM, said staff and the system's direct hedge fund consultant, Cliffwater LLC, will focus on established, institutional-quality hedge fund firms that will be able to provide additional capacity to PRIM if and when it expands its direct hedge fund program.
The managers chosen will have to have at least $500 million in the hedge fund strategy to which PRIM allocates money, as well as a three-year track record.
The 10 managers chosen at the October meeting will be awarded a combined $255 million, with $245 million available for the 10 managers to be chosen in December. PRIM expects that initial capital to be deployed by Jan. 2, 2012.
The board Tuesday also selected MSCI Barra as the system's provider of risk measurement services; nine firms responded to an RFP issued Feb. 7. PRIM staff members said the MSCI Barra system's strengths in fundamental equity modeling and various alternative asset classes, as well as its relatively attractive proposed fees of $1.745 million over the three-year life of the contract, gave it an edge over the other finalist, BlackRock Solutions.
The board likewise approved four private equity commitments Tuesday: up to $150 million for enterprise software and technology enabled solutions companies buyout vehicle Vista Equity Partners Fund IV; up to $60 million for middle-market private equity fund Genstar Capital Partners VI; up to $50 million for middle-market controlled buyout fund Quad-C Partners VIII and up to €20 million ($29.2 million) for venture capital fund Index Ventures Growth II.